Should a Christian use all the legal loopholes in or laws to avoid paying our debts? I personally think the bible teaches us to be honest, and when you use these laws to protect your assets you are cheating those you owe, or in some cases, you use them to not pay for your care and make others pay for you like when you are older. I ask this because my wife's sister said it was not "immoral" because it legal, but wouldn't that same logic mean abortion is not immoral because it is legal also. As Christians aren't we to be better than the standards of the world?
I look forward to hearing from you and what you think according to God's word.
Technically, a loophole is an ambiguity or poorly written law that allows unintended consequences. The bankruptcy laws are not loopholes but how the country intends to handle people who are in more debt than they can pay.
In the biblical days, when a person could not pay his debts, everything he had was sold. If this did not cover his debts, then he, his wife, and children were placed in servitude to work until his debt was paid off. The Old Law had a provision that Israelites in debt to fellow Israelites could not be placed in bondage for more than seven years.
Because of this, it was strongly recommended that debts be avoided. "The rich rules over the poor, and the borrower becomes the lender's slave" (Proverbs 22:7). However, it wasn't sinful to be in debt, just not wise. See Is it a Sin to be in Debt?
While we don't typically have the threat of slavery hanging over our heads if we don't make payments on our debts, it is still important to pay our debts. Borrowing involves making promises to repay the loaned money. God expects His people to keep their word. "But let your statement be, 'Yes, yes' or 'No, no'; anything beyond these is of evil" (Matthew 5:37). A person who mismanages his money is being a poor steward of what God has given him. Every effort must be given to pay what you owe.
However, there can be times when circumstances overwhelm a person. Illness or a disaster can strike and make it nearly impossible to pay back what is owed. Instead of servitude or debtor's prison, we use courts to determine how the debt will be settled. Some items are protected, usually items that are needed for living and being able to earn an income. That should not be surprising. The Law of Moses did not allow a person's garment to be held beyond that day. "If you ever take your neighbor's cloak as a pledge, you are to return it to him before the sun sets, for that is his only covering; it is his cloak for his body. What else shall he sleep in? And it shall come about that when he cries out to Me, I will hear him, for I am gracious" (Exodus 22:26-27).