Wednesday, June 08, 2022

The Bankrupt Christian

I find the answers on the GotQuestions website to be biblical and well-thought through — most of the time.

This one was a rare exception. It’s not that the writer is categorically wrong in his take on the question of Christians declaring bankruptcy, but I do think there are aspects of the issue he fails to consider.

Short version: his answer to “Should a Christian declare bankruptcy?” is a hard “No.” I’m going to suggest a better answer is “Maybe.”

Hear me out.

Reasons to Reject the Bankruptcy Option

The anonymous writer’s firm rejection of the bankruptcy option is based on two biblical principles with which I thoroughly agree:

  1. Godly people pay what they owe (Ecclesiastes 5:4-5); and
  2. Borrowing when you don’t intend to repay is characteristic of the wicked (Psalm 37:21).

In fact, the biblical “No” position is actually stronger than this writer lets on. For his proof text, he’s used a verse in Ecclesiastes that has to do with keeping religious vows, which the Lord Jesus taught are actually better not made. Solomon is not addressing the issue of financial obligations incurred in the normal course of business at all.

Further, the writer hasn’t used a single New Testament verse to make his case. So let’s give him a couple:

Pay to all what is owed to them: taxes to whom taxes are owed, revenue to whom revenue is owed, respect to whom respect is owed, honor to whom honor is owed. Owe no one anything, except to love each other.”

That’s the apostle Paul, and it pretty clearly covers repaying ordinary debts to third parties, where neither the government nor God are involved.

So why would I suggest there are circumstances where we are best to consider defaulting on debt? Four reasons:

1/ Some debts are too big to be repaid

Of all people, Christians ought to be the quickest off the mark to grasp that some debts are simply too big to ever be repaid. We read about one of these in the parable of the unforgiving servant, who owed a debt of ten thousand talents to the king that he simply could not pay. Commentators disagree about how much money this would be in today’s dollars, but some speculate it may have been as much as 160,000 year’s wages. In the end it does not matter much; the point is that the Lord is clearly contemplating a situation in which a debtor could not repay what he owed no matter what he did; the sort of situation that might occur if you were inadvertently responsible for burning down an office building or accidentally causing an uninsured collision with a Lamborghini Countach.

But lesser amounts can also be totally unrepayable. I knew a man in his forties whose business had incurred $125,000 worth of debt, who made between $20 and $30 an hour, and who had no major assets to sell off. With compound interest working against him, how was he supposed to pay that debt off within the remaining years of his working life while still holding back enough of his paycheck to pay his rent and feed himself? The answer is that he couldn’t, no matter how good his intentions.

2/ Some debtors are less deserving of repayment than others

My own conviction is that private debts ought always to be repaid. But an unpaid debt of $40,000 to a brother, uncle or friend whose heirs may be personally affected by my failure to repay him is surely in a different category from an unpaid debt to an incorporated business that: (1) has insured itself against losses from unpaid debt; (2) exists to create debt and exploit it for gain by charging usurious levels of interest; (3) has built its business model by calculating a certain level of failure to repay; and (4) voluntarily operates in societies that permit its borrowers to choose bankruptcy as an option, and even allow multiple bankruptcies.

For all that failing to repay a debt is surely a sin, usury is a bigger one. Scripture condemns it repeatedly. The Law of Moses condemned usury to a fellow citizen. The Psalms says righteous men do not put out their money at interest and even prefer giving to lending. Ezekiel says the usurer does not deserve to live. Nevertheless, our economic system is built on usury and promotes it non-stop. As currently structured, all Western economies depend on borrowing at interest to keep the wheels turning. And a society that allows interest rates in excess of 20% must take into account that in many cases those borrowing will never be able to repay what they have borrowed. Bankruptcy is a necessary part of such a system, because the system itself is immoral.

In such a system, the bankrupt may still be a sinner, but he is frequently more sinned against than sinning.

3/ Some borrowers are naive

One of the most difficult debts to clear up is school debt. In most places even personal bankruptcy will not discharge it. This is manifestly immoral, especially because the debt has mostly been accumulated by children completely unequipped to understand what they are doing and how it will affect them later in life, and whether they will even be able to monetize the degrees they are paying for. I had one friend who ran up $100,000+ in university loans who ended up working after graduation for $14/hour at Black’s Camera (before that chain went bankrupt!). Realistically, his chances of ever repaying the debt were zero. He was taken advantage of by a system that: (1) doesn’t teach important math concepts; (2) encourages debt with predatory glee; (3) deliberately over-values post-high school education in order to force teens into choosing college or university programs over going to work after high school; and (4) offers no guarantees that the money you spend will produce anything of value for you in the long term.

My friend made these bad choices as a teenager with no clue what he was getting into because his parents were locked into the thinking of their own generation and urged him to incur the debt for the sake of getting that all-important degree. So while he was very much responsible for the consequences of his choices, he was not nearly as well-informed as the average adult who goes to a bank to negotiate a business loan.

I know ignorance of the law is no excuse. Using that principle against others is also not terribly Christian.

4/ Bankruptcy is the Western Jubilee

While scripture certainly condemns getting in debt and failing to repay, the writer of the GotQuestions post does not bother to mention the fact that the Law of Moses made allowance for people who got into financial trouble so deep that they could not possibly recover. We have a gracious God, and he knows people fail. Debt forgiveness was baked into the Law. The Lord encourages us to pray for the forgiveness of our debts, and encourages us to forgive others.

Leviticus 25 sets out the rules for the year of Jubilee. Every fifty years (basically once a generation), property lost to others by way of debt was returned to its original owner in the greatest conceivable economic reset. Slaves who were working to pay off debt were to be released for nothing. Nobody could ever become so poor and indebted that there was no way out.

On top of this there was the Sabbath Release. Deuteronomy 15 required the same sort of release as the Jubilee every seven years. “Every creditor shall release what he has lent to his neighbor.” So the maximum number of years any debt could afflict the debtor was limited to six.

Now, Western bankruptcy is no Jubilee, and it is certainly no Sabbath Release. In Canada, it allows the bankrupt to keep no more than $3,000 of assets. He must sell everything else he owns to repay his creditors. It also puts restrictions on windfalls during the bankruptcy period (if you receive an inheritance or win the lottery, you will be expected to make full payment on your debts). Some bankruptcy trustees are predators, and may attempt to garnish future pension payments. So bankruptcy is far from a Christian system. Nevertheless, it is probably the closest thing we have to it in Western culture.

Ignoring the Jubilee principle can lead Christians into some very legalistic thinking. Our God wants us to pay our debts if we can, and he certainly doesn’t want us to incur them frivolously. He is also endlessly gracious and recognizes our weaknesses, and he makes provision for these. When you are in an impossible situation, it is not wrong to take advantage of all the legal options your society makes available.

My Advice

Not too long ago my mother told me about two friends who were struggling with debt. These folks had been poor as church mice for decades as a result of being defrauded by a con man. They were also ill and running up debt for expensive medication. One was on a fixed income; the other was unable to work. On top of this, they were committed to the Christian principle of repaying all debt, even though they had absolutely no way to do it.

My counsel was that they needed to think differently about these sorts of obligations. I believe bankruptcy was the very best option for them, and that the Lord would see no disgrace in it. I’m prepared to be corrected on that, but I do think we need to take all the relevant scriptural principles into account before we go enforcing one or two of the more obvious ones.

That’s true for others, and it’s true for ourselves.

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