Filing bankruptcy is not an easy decision for anyone. However, for some – particularly Christians – it presents a spiritual dilemma as well. Although it is always preferable to try and pay your debts first, if you are unable to do so, a better understanding of bankruptcy and its options for debt repayment often provides some relief from that internal struggle. Consider, for example, the following:
- Chapter 13. Bankruptcy under Chapter 13 does not involve the complete forgiveness of debt. It consists of a readjustment of payments over time. In cases where a creditor refuses to work with you on a manageable payment plan (something the Bible requires them to do), there is nothing unethical about asking a third party (here, the court) to make payment arrangements on your behalf.
- The Bankruptcy Code prohibits fraudulent acts. The Bankruptcy Code has specific provisions that punish those who try to use bankruptcy for fraudulent purposes. For example, former All-Star outfielder Lenny Dykstra is currently facing prison time here in Florida for failing to list all of his assets on his bankruptcy paperwork, among other things. Practically speaking, the Bankruptcy Code prohibits the very kind of “wicked” behavior that is forbidden in the Bible – the unethical abuse of creditors.
- The Bible provides for the release of debts. Deuteronomy 15:1 states that creditors must release debts every seven years (The Bankruptcy Code allows it only once every eight years). Note that the Bible also prohibits taking as collateral any possessions that are essential to living. Similarly, in a Florida bankruptcy where an estate is being liquidated to pay creditors, a debtor is allowed to keep their family home, up to $1,000 of the value of a car and up to a $5,000 in personal effects.
- Consider the reason for the bankruptcy. Statistics show that poor spending habits are not the reason for the vast majority of bankruptcies in this country. A majority of people file for bankruptcy after an unexpected illness or accident, or unemployment. Many wait until all of their savings – including their retirement – is exhausted before seeking relief. In a struggling economy where many are paid a subsistence wage and/or are lacking basic health coverage, it often comes down to a choice between paying the hospital and feeding your children.
- You can always pay your creditors back at a later time. Although it is not a legal requirement, for those who believe that they have a moral obligation to pay back all their debts regardless of the circumstances, there is no prohibition against paying your debts later when you are back on your feet. Even in cases where people opt for Chapter 7 fresh start filing, they often still pay back money owed to friends and relatives and/or negotiate reaffirmation agreements with other creditors.
If you are faced with the need to explore your options in bankruptcy, our attorneys sympathize with your ethical struggle and will work with you to arrange a solution that satisfies your conscience. We also provide post-bankruptcy workshops for our clients to help you get back on your feet. Call our office today.