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Bankruptcy and The Bible

Bankruptcy and the Bible

We live in a time like no other. Here in Michigan, many of us are struggling to just to keep up with our day to day living expenses. As a result of divorce, job loss or illness, many of us have incurred debts that we can never repay. Many Christians feel guilty about filing for bankruptcy.  We know that bankruptcy is a legal right guaranteed by the Constitution – but still – we are buried in guilt because of our strong Christian beliefs.

Before I filed bankruptcy myself back in 2005, here are some things that I thought about.

The Bible Does Not Condemn Bankruptcy

First and foremost, the Bible does not condemn bankruptcy. In fact, the  Old Testament provided that debts had to be forgiven every 7 years? No questions asked – no bankruptcy petition necessary. Here was the law: At the end of every seven years you shall grant a release of debts.

Similarly, the Old Testament commanded people to free their slaves every 7 years.  The Bible refers to debtors as slaves to their creditors.  So, based on the Bible, creditors are required to free their debt slaves every 7 years. Interestingly, under the bankruptcy law – you can file for Chapter 7 bankruptcy every 8 years.

Jesus and the Bible Both Talk About Mercy, Forgiveness and a Fresh Start

In both the Old Testament and the New Testament, compassion, mercy and justice were ideals that were superior to material things and economic concerns – like repaying credit card loans.

The Bible also speaks to compassion for those who are oppressed by over burdensome debts. The Old Testament provides many examples of the need for compassionate treatment of the poor and for the preservation of the family unit – compassion for the poor and support for the family were always more important than the material concern of repaying debts.

Deuteronomy 15:7-10 says: “If there is a poor man among your brothers . . . do not be hardhearted or tightfisted toward your poor brother. Rather be open-handed and freely lend him whatever he needs. Be careful not to harbor this wicked thought: The seventh year, the year for canceling debts, is near, so that you show ill will toward your needy brother and give him nothing. He may then appeal to the LORD against you, and you will be found guilty of sin. Give generously to him and do so without a grudging heart; then because of this the LORD your GOD will bless you in all your work and in everything you put your hands to.”

Jesus taught us about the law of mercy and the law of forgiveness and the importance of being gracious to everyone – even debtors.  Jesus said “It is easier for a camel to go through the eye of the needle, than for a rich man to enter into the kingdom of God.” He went on to teach “Use worldly wealth to gain friends. . . so that when it is gone, you will be welcomed into eternal dwellings.” Finally, Jesus taught us to “forgive and you shall be forgiven.”

Sin is a type of spiritual debt. In the Lord’s Prayer, Jesus told us to ask God to “forgive us our debts [sins] as we forgive our debtors [those who sin against us]” .  Sin creates a spiritual debt.  Borrowing money or using a credit card produces a financial debt.  Through the eyes of Jesus and under the law of mercy – both types of debt can be foregiven. As with any act of mercy, someone must bear the cost of forgiving the debt. Jesus bore the cost of our sins by dying on the cross.  In bankruptcy, your creditors must mercifully bear the burden of the forgiving your debts understanding that God will bless them for these acts of forgiveness and mercy.

Jesus taught us about the importance of forgiving financial debts to teach about God’s forgiving nature and the Christian principle of forgiveness. Jesus said  “When they had nothing with which to repay, he freely forgave them both.” On a spiritual level, through God’s grace and mercy, Jesus gave us a “fresh start” by canceling all our “sin” debts through His suffering and death on the cross.  Here in modern times, the US Bankruptcy Court will help overburdened debtors by giving them a fresh financial start.

Modern bankruptcy laws – just like these Biblical provisions – allow debtors to keep certain property when they file bankruptcy so that they can get a fresh start. These “fresh start” provisions discourages debtors from going into debt-bondage (slavery) again – just to survive.

Jesus Condemned Excessive Interest Charges

The Bible prohibited anyone from charging excessive interest. Current credit card interest rates of 35% or pay day loan interest in excess of 2000% would have been strictly forbidden.

Exodus 22:25-27 says: “If you lend to one of my people . . . who is needy, do not be like the money lender; charge him no interest. If you take your neighbor’s cloak as a pledge, return it to him by sunset, because his cloak is the only covering he has for his body. What else will he sleep on? When he cries out to me, I will hear, for I am compassionate.”

Leviticus 25:35-37 says: “If one of your countrymen becomes poor and is unable to support himself among you, help him as you would an alien or a temporary resident, so that he can continue to live among you. Do not take interst of any kind from him, but fear your God, so that your countryman may continue to live among you. You must not lend him money at interest or sell him food at profit.”

Deuteronomy 23:19-20 provides: “Do not charge your brother interest, whether on money or food or anything else that may earn interest.”

Jesus relied on these Biblical principles when he admonished the “money changers” and removed them from the Temple. Jesus “poured out the changers of money and overthrew the tables.” Jesus repeatedly talked about the importance of placing love and compassion above greed and wealth saying “If you lend to those from whom you hope to receive, what credit is that to you? Even sinners lend to sinners, to receive as much again. But love your enemies and, do good, and lend, expecting nothing in return, and your reward will be great, and you will be sons of the Most High; for he is kind to the ungrateful and the selfish.”

The Bible and Jesus Both Promote the Family Unit

The support of family and a stable society are found all throughout the Bible. Wealth was viewed as a blessing from God which resulted from obedience and was based on God’s compassion. Being compassionate for the poor and forgiving debts were all tangible ways that Israelites could show compassion for each other and honor God by following His law.

These principles are all found in our modern day bankruptcy laws. The underlying principle is that debt can be canceled to achieve some higher purpose – like the preservation of the family unit and the stability of our society.

Seek Counsel, Confess and Move On

If you can repay your debts, you must.  If you can’t, then you should determine how God would have you freed from the bondage of debt. The Bible tells us to seek wisdom and guidance from God and to seek Godly counsel.

If you have mismanaged your finances, confess your failings to God.   You can receive God’s forgiveness and cleansing.  Remember, there is no condemnation or guilt to those who are in Christ Jesus.  Jesus, by His love and mercy, gave us a fresh start, a new birth.  Bankruptcy is based on the law of mercy with divine origins and will help you get a fresh start – a new life!

The Bankruptcy Laws Are Based on the Bible

The bankruptcy laws were written with Biblical principles in mind. Any person who files for bankruptcy must have  “clean hands” and fully and honestly disclose all the facts regarding their financial matters. Debts involving fraud, drunk driving, and deliberate wrongdoing can’t be discharged. Moreover, the bankruptcy law does not allow the discharge of child support and alimony debts or student loans or taxes.  Through these restrictions the bankruptcy laws seek to balance justice and equity. Just like the Bible, our founding fathers recognized the importance of bankruptcy to help overburdened debtors get a “fresh start.”

I hope that this short article helps you with your decision to seek counsel and relief from your burdensome debts. The Bible and Jesus condemned excessive interest on loans and credit cards. The Old Testament required that creditors forgive their debtors and free their slaves every 7 years.

I hope that you can see the connection between the Michigan bankruptcy law and the Biblical teachings of both the Old Testament and Jesus. Mercy, forgiveness and a fresh start are central themes. The law allows you to get out from under burdensome debt so that you can provide for your family and live a good Christian life.

I am Attorney Mike Shovan who founded “Bankruptcy Doctor.” My office helps individuals and families file Chapter 7 and Chapter 13 Bankruptcy in Michigan.

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