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The Moral Case For Bankruptcy

Is Filing Bankruptcy Immoral

Filing Bankruptcy is not Immoral  

As people of faith, keeping our word is paramount even when it comes to paying debts to gargantuan and perhaps unscrupulous financial institutions with moral standards far lower than our own. So should we feel guilty about filing for protection under the bankruptcy code? The answer is no, and here's why:

Chapter 7 Bankruptcy has Biblical roots  

First, Chapter 7 personal bankruptcy, and to a lesser degree Chapter 13 bankruptcy, provide for forgiveness of debts. Now, not only is forgiveness central to the new covenant but under Old Testament law, debts are required to be forgiven every 7 years (see Deuteronomy 15:1-2). Under the US Bankruptcy code, debts may be forgiven every 8 years.  

You May Be Harming Loved Ones by Not Filing Bankruptcy   

Secondly, not all obligations are created equal. Think about who is really shouldering the debt burden when you've come to the end of your financial rope. Your children can no longer participate in extracurricular activities, you can't afford tithes and offerings, or to help out your elderly parents because every last cent is going to pay credit cards, title loans, medical bills, you name it. The fact is bankruptcy often relieves others from the burden of your debt.  

Your Creditors May Ultimately Benefit from Your Bankruptcy

Third, even the multi-billion dollar financial institutions that may have lured you into debt in the first place, the institutions whose debts will likely be discharged in bankruptcy (the unsecured ones, that is), also stand to benefit from the fresh start you get after bankruptcy because you will once again be able to participate in the financial marketplace.

The Prosperity Snowball Affect of the Fresh Start Bankruptcy Provides

Which brings me to my final point, society in general, not to mention our houses of worship, benefit when those burdened with debt are freed to maximize their potential, produce in excess of their need, invest wisely, and share the increase with others in need. Think about this, According to the Bible, everywhere Jesus went, he began by fulfilling a human need- he healed the sick, fed the hungry, and so on. Shouldn't we do the same? Of course we should; and that takes resources, resources which we should possess. If you've come to a point that you're so burdened with debt that you have nothing to give, filing bankruptcy and getting a fresh start may be the most moral decision you can make.