Is Bankruptcy Moral?

Is bankruptcy moral? This is a question that has bothered a number of our clients over the years. I believe that the answer is yes, and here is why. For most people in Western Virginia, morality is based, at least generally, on the Bible, and on teachings from the church. As I talk about elsewhere, I am a Christian, and have regularly attended church my entire adult life. I have attended a number of churches over the 20 years I have been a bankruptcy attorney. Without fail, within the first six months after joining a new church, the pastor has asked me how, as a Christian man, I can represent people filing bankruptcy. To say it another way, they believed bankruptcy was immoral. I took each of these pastors to the Bible, and shared with them Deuteronomy 15:1-11. This is a little-known passage that is part of what is called the “Sabbath Year” provision, a part of the law for Israel. It says that every seven years every debt is forgiven. This is a far more liberal discharge provision that can be found in modern American bankruptcy law. Interestingly, the only prohibition (“thou shalt not”) in the passage is the part that tells rich lenders not to refuse to lend because the Sabbath year was approaching. They did not call it bankruptcy. But when God set up the government and laws for ancient Israel, discharge of debt was absolutely included. Back to my pastors. While it is a little disconcerting that none of them had made the connection before our conversation, I will give them great credit: in each instance, the pastors who questioned the morality of bankruptcy understood that what they believed wasn’t what the Bible provided. And each began to refer people to me to obtain relief from overwhelming debt.