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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Last modified: September 12, 2007