“Chapter 11”

Thursday, July 23, 2020

    Is it okay for a Christian to file for bankruptcy?  Wouldn't that be basically the same thing as lying since you've signed legal documents promising to make payments for the life of the loan?  I know of someone who rationalized "letting the bank have the house" even though the house is worth a lot less now.  What does the Bible say about this?

Sincerely,
Money Management

Dear Money Management,

Bankruptcy is never “okay”, but there are mixed reviews on whether or not it is a sin.  Bankruptcy always involves pain and suffering, and regardless of whether it is a sin, filing for bankruptcy is never an easy road.

Some folks point to verses that talk about keeping your word (Matt 5:37) and being a faithful steward (1 Cor 4:2) as prohibitions against bankruptcy.  Probably the strongest condemnation can be found in Ps 37:21.  There can be no doubt that God desires us to pay our debts and to hold ourselves accountable for the management of what resources He gives us.  However, that isn’t the only side of the story.

What about when the debt is too large to ever repay?  The Bible clearly talks about such circumstances – our debt of sin being the greatest example.  Verses like Lk 7:40-42 and Matt 6:12 emphasize the value of forgiving debts and helping those who are in a financial bind.

So, what we are left with are two Bible principles.  Those who are borrowing should be careful to not be reckless or spend lavishly that which they haven’t earned themselves, and they should seek to faithfully and diligently repay their debts because that is what good stewardship is.  And secondly, when there is opportunity for a lender to show mercy to an honestly struggling debtor, that is a blessing as well.

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