Bankruptcy and the Bible: Is it “moral” or “Biblical” to file bankruptcy?

March 10, 2015

Many times our clients find themselves in a moral dilemma: is it “moral” or “Biblical” to file for bankruptcy?   The answer to this is “yes.”  It is morally acceptable and “Biblical” to file for bankruptcy relief if you are appropriately in need of such relief.

In Deuteronomy 15:1-2, God’s law for the nation of Israel puts forth a “bankruptcy-like” system very similar to our own U.S. Chapter 7 system:

At the end of every seven years thou shalt make a release.

And this is the manner of the release: Every creditor that lendeth ought unto his neighbour shall release it; he shall not exact it of his neighbour, or of his brother; because it is called the Lord’s release.

But, unlike our bankruptcy system, God’s “bankruptcy” or debt forgiveness was to happen AUTOMATICALLY every 7 years instead of the requiring the party to “declare” bankruptcy (as if you are fully entitled to it).   Note also, that with ancestral lands being required to stay within the family, the bible also offered very liberal “bankruptcy exemptions” to protect real and personal property.

Although the models of Chapter 7 and Chapter 13 bankruptcy are very similar to how the Bible dealt with insolvency within the nation of Israel, it is important to point out that our modern bankruptcy system is not identical – at least not in the spiritual or “national” aspects of “the LORD’s Release” (the Shemita in Hebrew).  These basic “principles” of debt forgiveness prevent social injustices such as slavery and imprisonment for debts. The greater spiritual aspects of the LORD’s release (the Shemita) are so extensive that entire books have been written on the subject.

Another important point is that bankruptcy is never or rarely “immoral” in itself.  However, the actions leading up to bankruptcy or certain abusive uses of bankruptcy can be immoral, especially when they are found in their extreme ends.  Getting loans without any intent to repay them is certainly “bearing false witness.”   The Bible warns against borrowing and lending money.  Keep in mind, however, that many times after making some bad financial choices, you will likely have no choice: you will need to file bankruptcy.   Bankruptcy is not “wrong” in itself: but continuing in financial irresponsibility after bankruptcy can and certainly should be looked at as “wrong” or “anti-biblical.”   At least, if it can be avoided.

-Indianapolis Bankruptcy Attorney John F. Bymaster

Want To Know More?

Read Attorney John F. Bymaster’s book called, “Is Bankruptcy Biblically Moral?

FREE Consultation – Get Debt Free!

Fill out the form below or Call (317) 769-2244 Today!