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Christian
Topic: Bankruptcy
October 25, 2004 - by Crown Financial Ministries
The term bankruptcy comes from two Latin
words and literally means “broken bench.”
Increase in bankruptcy
The term bankruptcy comes from two Latin
words meaning “bench” and “break”;
thus, its literal meaning is “broken bench.”
Under Roman law, after gathering together and dividing
up the assets of a delinquent debtor, the creditor
would break the debtor’s workbench as a punishment
and a warning to other indebted tradesmen. In addition,
these people were generally deprived of their civil
rights.
In our society today, revisions to the bankruptcy
laws and changes in consumer attitude toward bankruptcy
seem to have fostered a climate in which people
regard bankruptcy as a more plausible remedy for
financial problems than they once did. Recent statistics
that show a marked increase in the number of personal
bankruptcies seem to support this assumption.
Samuel J. Gerano, executive director of the American
Bankruptcy Institute, said the dramatic increase
in consumer filings could be primarily attributed
to three variables: (1) sustained levels of household
debt; (2) household budgets so overextended that
it seems impossible to get out from under debt;
and (3) the decrease in bankruptcy’s negative
stigma and the abundance of credit which makes bankruptcy
an attractive option.
Biblical principles regarding bankruptcy
Psalm 37:21 says, “The wicked borrows and
does not pay back, but the righteous is gracious
and gives.” A debtor needs to make a commitment
to pay back whatever he or she has borrowed, regardless
of circumstances or how long it takes.
Solomon said, “It is better that you should
not vow than that you should vow and not pay”
(Ecclesiastes 5:5). God is a faithful God, but His
Word is very clear: A debtor is obligated to repay
what he or she has borrowed.
Rather than the first option, bankruptcy should
be considered a last alternative. Debtors first
need to try to work with creditors and be willing
to make whatever sacrifices necessary to fulfill
their promise to repay.
If an individual borrows money with an agreement
to repay, bankruptcy does not negate this agreement
scripturally. This doesn’t mean that a debtor
in a hopeless situation cannot file bankruptcy;
however, every other possible option should be tried
before filing for bankruptcy.
These options might include selling home, car, or
any major assets; liquidating any retirement funds;
seeking loans or gifts from friends, extended family,
and/or church family; taking on additional jobs;
postponing further schooling in order to work full
time; and working with a credit counseling service.
If all other options have been exhausted and there
is still a need to file bankruptcy, there are two
things to which a debtor must commit before filing.
First, a debtor must be willing to accept the absolute
requirement to live on a conservative budget and
pay the debts back. In some cases, this may take
an entire lifetime.
Second, the debtor’s motive must be honorable,
according to Scripture. If the bankruptcy action
is being taken to protect the legitimate rights
of the creditors, the action is biblically acceptable.
However, if the motive is to protect the assets
of the debtor, without due consideration of the
creditors, the action is unscriptural. “Do
not withhold good from those to whom it is due,
when it is in your power to do it. Do not say to
your neighbor, ‘Go, and come back, and tomorrow
I will give it,’ when you have it with you”
(Proverbs 3:27-28).
Conclusion
God’s Word makes is clear that a vow (promise)
of any kind is not to be taken lightly. Once someone
has given his or her word, it becomes a binding
contract. So, before agreeing to any terms, it is
assumed that an individual has carefully considered
the consequences.
For the current generation, this concept seems to
be rarely taught and seldom applied. A vow to pay
a creditor is usually deemed something made under
one set of circumstances and broken under another,
or it is ignored when the purchased product loses
its usefulness. However, God’s Word says that
debtors are to be held accountable.
Although our nation’s legal system may discharge
debts through a bankruptcy process, God’s
people should still repay their debts in full, even
after a bankruptcy.
This can be a powerful witness to a world that is
cynical about Christianity making any practical
difference in a person’s life. As believers,
we are held to a higher standard than merely what
is legal.
© Copyright 2004, Crown
Financial Ministries. All rights reserved.
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