The short answer is yes. Bankruptcy is not a sin and bankruptcy is not the problem. The problem is caused by behaviors such as living beyond one’s means or not exercising wisdom in spending decisions. The solution to poor stewardship and extravagant spending is to ask God for forgiveness and He is faithful to forgive all our transgressions. 1 John 1:9 [1]. The solution to overwhelming debt is bankruptcy.

Conversely, when a Christian, through no fault of his own, finds himself in overwhelming debt, again bankruptcy is the solution. Remember that God promised that he would never lay upon us more than we can bear, but with every temptation he would make a way of escape 1 Corinthians 10:13 [2]Bankruptcy is a legal way out of debt problems.

A Christian should not feel guilty about filing bankruptcy since the biblical principles of grace and forgiveness are reflected in the bankruptcy process.

Grace is the undeserved love of God. We cannot earn God’s love nor do we deserve it, but God loves us anyway. Also, some people have been irresponsible with their money and probably don’t deserve the benefits of bankruptcy. However, anyone, serving or not, can have the benefits of a bankruptcy discharge…and this is legislative grace.

When God forgives a person’s transgressions, He starts over with a clean slate. His transgressions are canceled and forgotten. 2 Corinthians 5:17 [3]. Similarly, a debt discharge from one in bankruptcy gives the debtor relief from the obligation to pay their creditors giving them a fresh financial start.

Also, how can bankruptcy be bad when God bankrupted his chosen people, the nation of Israel? In Deuteronomy 15:1-18, the seventh year is the release of the LORD, and all debts must be forgiven. The reason for this law is to relieve the poor. So every seven years the Israelites granted their countrymen a discharge of all their debts. Interestingly, the bankruptcy code limits a debtor to filing for bankruptcy once every seven years.

Therefore, a Christian should not feel guilty about seeking debt relief through the bankruptcy process. The benefits of bankruptcy are demonstrated in both biblical principles and practices.

There is a pattern that emerges in the Bible. God has repeatedly turned disaster into a blessing. Countless times God has taken a desperate situation and turned it around to bless his people and bring glory to his kingdom. Remember that God works through people and God can use bankruptcy to bring about financial change for Christians.

Footnotes:

[1] 1 John 1:9 But if we confess our sins to him, he is faithful and just to forgive us our sins and to cleanse us from all unrighteousness. (New live translation)
[2] 1 Corinthians 10:13 The temptations (trials) in your life are no different than what others experience. And God is faithful. He will not allow the temptation to be more than you can bear. When you are tempted, he will show you a way out so you can resist. (New live translation)
[3] 2 Corinthians 5:17 This means that anyone who belongs to Christ has become a new person. The old life is gone; a new life has begun! (New live translation)

Thinking Outside the Box Inc.
Attorney Jon Dowat
Phone: (630) 225-9840
Fax: (630) 836-8414

Posted: 8/19/2010
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