Bankruptcy and the Bible

28 Jan Bankruptcy and the Bible

Bankruptcy And The Bible

According to the Bible, it it moral to file for bankruptcy? Recent studies have shown that the average American family is only three weeks away from personal bankruptcy. So it is time to revisit what the Bible teaches us about debt.

The Bible makes it clear that people are generally expected to pay their just debts. Leviticus 25:39. No one will or should argue against this. However, the Bible balances the moral and legal obligation to pay your just debts with the need for compassion and the requirement–that’s right, requirement–that debts must be canceled at periodic intervals.

The basis for this statement is the sabbatical and Jubilee years. (And, of course, the secular basis arises out of the Constitutional requirement that Congress enact uniform laws allowing businesses and consumers to cancel and to restructure debt obligations and its subsequent enactment of the Bankruptcy Code.)

This Biblical support for the legal right to cancel debt is enforced by the even stronger Biblical doctrine that prohibits interest inany amount, rather than just prohibiting usury or excessive interest. Within the areas of economic justice and stability, the Old Testament has many examples of the compassionate treatment of the poor, and with preservation of the family unit. These goals are superior to the material concerns of debt repayment. Deuteronomy 15:7-10 is particularly forceful:

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 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.

In the Old Testament, debt was canceled at regular intervals: every seven years. Deuteronomy 15:1-2says:
At the end of every seven years you shall grant a release. And this is the manner of the release: every creditor shall release what he has lent to his neighbor, his brother, because the Lords release has been proclaimed.
Under this Biblical model, the debtor’s payment or non-payment of debts was not in question.It was a strict model, with no means test or detailed analysis of every debt. (This passage is similar to many other Old Testament commandments, including Deuteronomy 5:17’s “Thou shall not kill,” which provides no specifics and is absolute.) Old Testament lenders were admonished to be merciful, but debts were canceled every seven years whether they liked it or not.
The Old Testament model can be legitimately applied to modern day bankruptcy laws. The principle is that, while taken seriously, debt can be canceled to achieve some higher purpose, such as the preservation of the family unit. It also should be noted that Deuteronomy 15:12-13 provides that slaves should be freed every seven years creating an interesting analogy between the creditor-debtor and the master-servant relationship.

The Bible on Interest

The Biblical use of the term “usury” refers to our modern word “interest,” rather than to its modern meaning of “excessive interest”. Only a small number of us would seriously question the morality of profiting from a loan at reasonable interest rates. However, the Talmud (the series of books interpreting the Old Testament) quotes an ancient rabbi as saying: “It is better to sell your daughter into slavery than to borrow money on interest.” The Lord only knows what this same rabbi would say today if confronted with credit cards bearing interest rates of 34.99% and higher and with some pay day lenders demanding annual rates in excess of 2,000%.
The Biblical doctrine of usury rests primarily on three texts: Exodus 22:25; Leviticus 25:35; and Deuteronomy 23:19-20. Exodus and Leviticus prohibit loans of money or food with interest to a needy brother or sister or even a resident alien. Deuteronomy forbids taking interest from any person. Other Books of the Bible underline the importance of this prohibition on interest. For example, Psalm 15:5 characterizes a righteous man as one who, among other things, lends his money without usury. Both Ezekiel 22:12 and Nehemiah 5:0-11 condemn lending money with interest, especially to the poor. And Ezekiel 18:13 list the taking of interest among sins worthy of death.
The prohibition on interest is based on God’s covenant with Israel. The rule is founded upon the compassionate treatment of various oppressed groups: the resident alien; the widow; the orphans; and the poor. Exodus 22:25-27 states the law in explicit terms: “If you lend to one of my people among you who is needy, do not be like the money lender; charge him no interest. If you take your neighbors 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 companionate.”
Leviticus 25:35-37 provides that:
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 interest 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.
Finally, Deuteronomy 23:19-20 provides:

Do not charge your brother interest, whether on money or food or anything else that may earn interest.

Jesus clearly had these Biblical principles in mind when he admonished the money changers and removed them from Gods house, the sacred Temple. In John 2:14, Jesus poured out the changers of money and overthrew the tables. Jesus, in fact, was always true to the principles underlying usury and debt forgiveness and the notion of the importance of placing love and compassion above greed and wealth.
In Luke 6:34-35, Jesus said:
And 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.
In other words, the followers of Jesus were to be concerned with the welfare of others, even when met with hatred and abuse.
The consistent teaching of both the Old and New Testaments is that compassion, mercy and justice are to override purely economic concerns, such as loans. Religious people are to be gracious to all, even debtors. Jesus said that God does cause the rain to fall on the just and the unjust, and in Mark 10:25 he said that, “[i]t is easier for a camel to go through the eye of a needle, than for a rich man to enter in to the kingdom of God.” And in Luke 16:9, He said, “I tell you, use worldly wealth to gain friends for yourselves, so that when it is gone, you will be welcomed into eternal dwellings, and to forgive and ye shall be forgiven.”
The compassion of the Scriptures, including the setting aside of legitimate rights of lenders, was typical of economic relationships in the economy of early Judeo-Christian societies. The central theme is one of a stable society with a guarantee of economic security to each family. Wealth was viewed as a blessing from God (Deuteronomy 8:11-18, 28). This blessing resulted from obedience and was based on God’s compassion. Tithing for the poor, the gleaning laws, the year of the Jubilee, were all tangible ways that Israelites could show compassion for each other and honor God by following His law. Beyond income-maintenance programs, Biblical Law provided a permanent mechanism, such as the Sabbatical year and Jubilee, to ensure that temporary misfortune barred no family from full participation in economic life.

The 2005 Bankruptcy Law

The bankruptcy law passed by Congress and signed into law by the President in 2005 lacks any compassion for the poor, makes no redress to the modern day money changers who shamelessly peddle plastic at rates that would draw the Holy wrath of God himself, provides no relief but only additional misery to the families saddled with thousands of dollars in medical bills, and most importantly, severely undermines the economic and social stability of the average American families with debt trouble.
These Americans are like the farmers of the Old Testament who proclaimed to King Nehemiah, “We have had to borrow money to pay the king’s tax on our fields and vineyards. Although we are of the same flesh and blood as our countrymen and though our sons are as good as theirs, yet we have to subject our sons and daughters to slavery. Some of our daughters have already been enslaved, but we are powerless, because our fields and our vineyards belong to others.” Nehemiah 5:3-5.
Nehemiah responded to his people and ordered them “to let the extracting of usury stop! Give back to them immediately their fields, vineyards, olive groves, and houses and also the usury you are charging them.” Nehemiah 5:11.
It is time for our elected Representatives in Washington to follow the example of the Holy Scriptures and to respond in kind by repealing the current Bankruptcy Bill and by not taking away power from the powerless and eliminating relief for the suffering.
Photo courtesy of knowhim.
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Brett Weiss, a senior partner at Chung & Press, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11 and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his law partner, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute, the Bankruptcy Bar Association of Maryland, and the Civil Justice Network. He has been recognized as a “Super Lawyer” every year since 2007 for Maryland and the District of Columbia, and in 2011 received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, The United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.
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