Is Bankruptcy "permissible" for a Christian?

Did you know that in 2005 over 2 million households declared bankruptcy? To be exact that would be 2,078,415 households. Or to put it another way about 1 out of 50 households declared bankruptcy. If you have 50 friends and each one of them represents a different household, there is a good chance one of them declared bankruptcy in 2005. Wow!

Not only is that number high, it was increasing extremely fast. Only 20 years prior to 2005 (1985) the number of bankruptcies in America was just over 400,000. Although 400,000 is a lot, it is mind boggling to realize that in two decades bankruptcies increased over 500%. In 2005 Congress approved a new bankruptcy law that made it more difficult to declare bankruptcy. However very quickly it appears we are moving towards the 2005 level.

What is God's perspective on bankruptcy? With so many Americans declaring bankruptcy, you know there are some Christians included in those statistics. And probably most of us know some believers who have declared bankruptcy. So what should be our position as believers on this subject?

Before we start our discussion, we probably need a little better understanding of the current types of bankruptcy. There are two types of personal bankruptcy; Chapter 7 and Chapter 13. The basic difference between the two is that Chapter 7 provides for complete elimination of personal debt and Chapter 13 involves creating a plan that enables us to make repayment of our debts according to our income.

Although I believe that most bankruptcies are a result of bad decisions and improper use of debt, some bankruptcies are a result of circumstances outside of our control. Here are a few reasons when bankruptcy may be the best (only) option for a Christian. 1. Creditor forces you into bankruptcy, 2. There is literally no other option 3. Emotional health of the borrower is at stake.

So what should be our position if we have declared bankruptcy as a Christian. As with debt, we can not find a verse that says thou shalt not declare bankruptcy or bankruptcy is a sin. However, God again gives us some very clear principles that apply to declaring bankruptcy.

Psalms 37:21 says "The wicked borrow and do not repay...." Ecclesiastes 5:5 says "It is better that you should not vow than that you should vow and not pay" and all through the OT and NT we are told not to lie or bear false witness. When we don't pay our bills on time, we are bearing false witness. So I believe that the principle is pretty clear that we have to pay our bills. This includes even if we have declared bankruptcy.

We as Christians answer to a much Higher authority than the courts of America. If the courts of this land give us permission not to pay our debts by granting us relief under Chapter 7 bankruptcy, we still have a responsibility to pay them back. This would be the case even if it takes the rest of our lives.

I have known of 3 Christian families who have declared bankruptcy and made the commitment to pay back all of their debts. (It took many years.) I have also known another professing Christian couple that felt they did not have a responsibility to pay the debts back that were forgiven under Chapter 7.

The testimonies of the three who paid back their debts include many lives that God touched through their journey. The other family continues to struggle financially and in other areas. If you would like, follow this link to an article on Crown's website and read how God used Ralph and Walter Meloon to touch thousands of lives as they completed their journey from bankruptcy.

I believe that we as a Christian has a responsibility to pay back our debts, no matter what. This includes if we have declared bankruptcy. I would be very interested to hear of your thoughts on Christians declaring bankruptcy.