Christians and Bankruptcy
by Art Cornell
via Sentry Magazine, Vol. 15, No. 1, March 31, 1989
On a recent visit to the Chapallear's home, I told Floyd I was working for a bankruptcy judge. He asked me whether I thought a Christian could file for bankruptcy. I thought for a moment and replied that Psalms 15 says that a righteous man will keep his word even to his hurt, and so using bankruptcy to break one's word would not seem right. Before I could say much more, he asked me to write this article (just a warning to anyone else to whom he poses an apparently innocent question). After some reflection, I believe my first answer is still correct, although I recognize that bankruptcy is much more complex than this simple answer and that some uses of bankruptcy may be acceptable.
Bankruptcy is wrong in situations where individuals voluntarily file a petition with the bankruptcy court to free themselves from the legal obligation to pay either their promised obligations or taxes. Lawyers usually refer to this as a voluntary chapter 7 liquidation. The court order that relieves a person from the legal obligation to pay debts is called a discharge in bankruptcy, or a discharge for short. Whatever it is called, using this kind of bankruptcy is wrong for at least three reasons.
First, it amounts to breaking promises. Whenever we borrow money, be it with credit cards, car loans, or home mortgages, we promise to pay it back. As Christians, we should keep our word.
Jesus teaches us to keep our word in addition to the teaching of Psalms 15:4. In Matthew 23:16-21 Jesus condemned the scribes and the Pharisees for making up different classes of oaths, some of which could be broken and others of which had to be kept. According to them swearing by the Temple was nothing but swearing by the gold of the temple was binding, and swearing by the altar was nothing but swearing by the sacrifice was binding. Jesus said that to swear by one was to swear by all. "Therefore whoever swears, swear both by the altar and by everything on it. And he who swears by heaven, swears both by the throne of God and by Him who dwells within it" (Matthew 23:20-21). Jesus was teaching that God would hold men to their oaths. Moreover, in the Sermon on the Mount, Jesus told us not to swear oaths but to let our "yes" be yes (Matthew 5:33-37). Jesus was teaching that we should keep our word without swearing.
If a Christian files bankruptcy to renege on his promises, then his "yes" is no longer yes. He is not keeping his word.
Secondly, people seeking discharges are often avoiding their obligation to pay taxes. Paul tells us in Romans to obey the governing powers and to pay our taxes (Romans 13:6-7). Even though no promise is broken, we have an obligation to God to pay our taxes. Tax evasion through bankruptcy or any other means is not right.
Last, and perhaps most important, walking away from debts damages our example to the world. Peter wrote, "Keep your behavior excellent among the Gentiles, so that in the thing in which they slander you as evildoers, they may an account of your good deeds, as they observe them, glorify God in the day of visitation" (I Peter 2:12). Avoiding obligations gives unbelievers good cause to condemn us.
Whether such bankruptcies are legal remains unanswered because human laws do not govern what is right. Our laws also allow divorce for virtually any reason, which is not right. The Scriptures teach that we should keep our word.
That said, financially strapped brethren have some alternatives. First, they can talk to creditors to make arrangements to stretch their payments. Second, if a private arrangement cannot be reached, bankruptcy law, notably Chapter 13, offers ways to spread out payments to help people pay all of their debts—not to avoid their debts but to pay them all off.
Even with these alternatives, the conclusions here are no doubt harsh. Most people who consider bankruptcy are in desperate shape. They often face crushing debts. In many ways, their situation is like that of Christians who face other serious trials. Other Christians have to care for ill parents for years; others have to care for emotionally or physically handicapped children; still others have to endure troubled marriages. Like financially strapped brothers and sisters, Christians who face these trials are often tempted to give up and forsake their obligations, but to please God, they endure. In the same way, financially strapped saints need to bear up and carry their burdens. They must not give up. He who overcomes, Jesus tells John in His messages to the seven churches of Asia, will have a home with God in Heaven.
