Christians Drowning in Debt; Should they File Bankruptcy?
Some Christians who are facing significant financial difficulties ask the question, "does filing bankruptcy conflict with the teachings of the Bible?" Faith affects every aspect of your life; personal finances are no exception. When debt becomes so overwhelming that it paralyzes a person's ability to function, bankruptcy may be an option.
Bankruptcy is a legal process of discharging debt or making alternative arrangements for repayment. If you are looking for a direct reference from the Bible for acceptance of modern-day bankruptcy, you will not find it, but do not lose hope. The concept of bankruptcy did not exist in biblical times. However, that does not mean that bankruptcy is wrong for Christians. The closest things to bankruptcy mentioned in the Bible were general debt and slavery. If you owed someone and could not pay, you worked your debt off as a slave. In Deuteronomy, chapter 15, Moses the Prophet writes specifically about debts of the Israelites.
At the end of every seventh year you must cancel the debts of everyone who owes you money. This is how it must be done. Everyone must cancel the loans they have made to their fellow Israelites. They must not demand payment from their neighbors or relatives, for the Lord's time of release has arrived. This release from debt, however, applies only to your fellow Israelites—not to the foreigners living among you. (Deuteronomy 15:1-3, NLT)
Metaphorically, Jesus talks about debt when he teaches the Lord's Prayer, "And forgive us our debts, as we forgive our debtors" (Matthew, 6:12, KJV). You can find many other Bible verses that relate to the forgiveness of debt because many times in the Bible debt is analogous to sin. However, never does the Bible directly state that to borrow money is a sin. What we are warned against is the bad behavior of some past debtors, such as in this verse from Psalms: "the wicked borrows and does not pay back, But the righteous is gracious and gives" (Psalms 37:21, NLT).
When Jesus tells the Parable of the Unforgiving Debtor, it is the reprehensible behavior of the greedy slave that is sinful; the debt is not the sin. In this parable, Jesus tells the story of a king who is collecting a debt from a man that owed ten thousand talents. That would be 375 tons of silver, and in today's dollars, it would be $178,560,000! The man could not pay, so the king ordered the man sold into slavery along with his wife and children. The man pleaded with the king to have mercy on him.
The king did pity the man and forgave him of his entire debt. However, the sinful behavior comes later when the forgiven man seeks to collect a debt that is owed to him. The forgiven man refuses to give extra time to someone that owes him money, and he has his debtor thrown into prison. The king hears of this selfish behavior and revokes the pardoned debt. "Then the angry king sent the man to prison to be tortured until he had paid his entire debt" (Matthew 18:34, NLT).
In her book, Forgive Us Our Debts, attorney Anne-Marie Bowen tells of the many ways she has seen people get into financial trouble. She tells of one widower in his 90's who lived on Social Security and had a massive credit card debt that he could not pay. After the death of the man's wife, he found out that she had charged $50,000 to a credit card that he now owed (Bowen, 2018).
A problem that I commonly see when discussing financial planning with people is credit card debt. Too many times, if a person has difficulty keeping up with their debt, they say there is no other way to make ends meet other than making purchases on their credit card. If you are at the point where you see no other alternative to surviving than charging more to your credit cards, you should pause. There are different ways to solve your financial problems! Pray to God for the wisdom to make good choices and look for alternatives. When credit card overcharging continues, it leads to even worse financial trouble.
No matter how moral it seems to be to repay debt, life does not always work out the way it is expected to. Some people end up not being able to pay their debts. Sometimes debt problems happen because of poor financial choices, and sometimes debt problems occur because of unforeseen events. Whether debt problems occur because of poor choices or unexpected events, many people who cannot repay their debts will look for a legal way to either discharge their indebtedness or renegotiate their payments—and this is when bankruptcy should be considered.
If you are looking for biblical justification for using bankruptcy today, here is one way to look at the situation. Paul the Apostle told us in his letter to the Romans to follow the law, "Everyone must submit to governing authorities. For all authority comes from God, and those in positions of authority have been placed there by God (Romans 13:1, NLT). Our country's founders saw the importance of allowing people the right to seek financial relief from debts. That right for citizens to use bankruptcy is in the United States Constitution, "The Congress shall have power... to establish... uniform laws on the subject of bankruptcies throughout the United States" (U.S. Const. art. I, § 3, cl. 4).
Yet bankruptcy does carry a stigma for some people. Over the past few centuries, our society has developed a moral compass that points toward honesty, and fairness. Benjamin Franklin exemplified our country's early debt morality when he wrote in Poor Richard's Almanac, "If you would know the value of money, go out and borrow some; for he that goes borrowing goes a sorrowing," and "Creditors have better memories than debtors." (Franklin, 1758). And, more recently, President Ronald Reagan saw the ills of debt in society too: "For decades, we have piled deficit upon deficit, mortgaging our future and our children's future for the temporary convenience of the present" (Ronald Reagan Presidential Library).The sentiment of our society is that repayment of debt is a significant responsibility. Moreover, that morality is common among Christians too.
Nonetheless, if you are a Christian that is anguishing over your debts and you cannot find a way out of your financial dilemma, you may consider bankruptcy. However, bankruptcy is very complicated and something you shouldn't tackle alone. You need to consult with an attorney who specializes in bankruptcy.
There are other alternative debt repayment programs you can investigate instead of turning to bankruptcy—however, I would strongly encourage you to meet with a bankruptcy attorney before paying any money to anyone else who claims they can help you with your debt, since there are many debt-relief plans that prey upon peoples' desperate financial situations. Consult with a bankruptcy attorney, even if you must pay for an hour of their time. The attorney is obligated to be your advocate. Ask them about the other debt repayment options available as well as bankruptcy.
As you prayerfully consider how to turn your finances around, meditate on the words of Paul the Apostle, "We can rejoice, too, when we run into problems and trials, for we know that they help us develop endurance. And endurance develops strength of character, and character strengthens our confident hope of salvation" (Romans 5:3-4, NLT).
– Van Richards is a Christian financial advisor as well as the founder of https://www.Advice4LifeInsurance.com and http://www.Advice4Retirement.com. Van draws from his 30 years as a financial advisor to write about financial issues from a Christian perspective. You can contact him at van@advice4lifeinsurance.com.