The Sabbatical Year and the Forgiveness of Debts

12 Sep The Sabbatical Year and the Forgiveness of Debts

At sundown on September 12, 2007, the Jewish new year of 5768 begins. If you’re not Jewish, why does this matter (and why am I blogging about it on the Bankruptcy Law Network?) It’s important because 5768 is a Shemitah (literally, “release,” but commonly known as the Sabbatical) year. Part of the observance of the Sabbatical year includes the forgiveness of debts.

The Sabbatical year is established in Deuteronomy: “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 neighbor shall release it; he shall not exact it of his neighbor, or of his brother; because it is called the Lord’s release. (Deuteronomy 15:1-2). In the Book of Nehemiah, it says, “[A]nd if the peoples of the land bring ware or any victuals on the sabbath day to sell, that we would not buy of them on the sabbath, or on a holy day; and that we would forego the seventh year, and the exaction of every debt.” (Nehemiah 10:32).

In general, a Sabbatical Year cancels all debts, whether oral or in writing, even if he writing contains a clause placing a lien on the borrower’s real estate as security for the loan. A learned Rabbi, Rav Kook, described the Sabbatical year this way:

“The seventh year serves to rectify the social ills and inequalities that accumulate in society over the years. When poorer segments of society borrow from the wealthy, they feel beholden to the affluent elite. “The debtor is a servant of the lender” [Proverbs 22:7]. This form of subservience can corrupt even honest individuals in their dealings with the rich and powerful. The Sabbatical year comes to correct this situation of inequality and societal rifts, by removing a major source of power of the elite: debts owed to them.”

In modern times, unless you are an observant Jew, the Sabbatical Year is not observed. Nevertheless, its seven year debt forgiveness forms the philosophical underpinning for Chapter 7 in the Bankruptcy Code. Both allow for the forgiveness of debts, and both serve the same societal purpose.

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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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