Bankruptcy and the Bible

Dalton Camp proclaimed several years ago that, “having lost its value, money may no longer be the root of all evil; credit having taken its place.” This statement demonstrates the paradox of modern day religion and debt—should our reaction be one of condemnation or one of compassion. Since many recent respected studies have shown that the average American family is only three weeks away from personal bankruptcy, and the changes to the Bankruptcy Code in 2005 that tried unsuccessfully to deny bankruptcy relief to hundreds of thousands of American families is now the law, let’s look at the history of Bankruptcy.

The Old Testament

Compassion:

While the Bible makes it clear that people are generally expected to repay their debts, Leviticus 25:39, this moral and legal obligation must be balanced by the need for compassion.

The Old Testament is replete with examples of compassionate treatment of the poor, and with preservation of the family unit. These goals were superior to the material concerns of repayment of debt.

For instance, Deuteronomy 15:7-10 is particularly forceful. It provides as follows: “If there is a poor man among your brothers . . . do not be hardhearted or tightfisted toward your poor brother. Rather be open-handed and freely lend him whatever he needs. Be careful not to harbor this wicked thought: ‘The seventh year, the year for canceling debts, is near,’ so that you show ill toward your needy brother and give him nothing. He may then appeal to the LORD against you, and you will be found guilty of sin. Give generously to him and do so without a grudging heart; then because of this the LORD your God will bless you in all your work and in everything you put your hands to.”

When enough is enough:

The Bible times this forgiveness with the sabbatical and Jubilee years.

Deuteronomy 15:1-2 provides: “At the end of every seven years you shall grant a release. And this is the manner of the release: every creditor shall release what he has lent to his neighbor, his brother, because the Lord’s release has been proclaimed”.

Under the Bible a debtors’ payment or non-payment of debts was not the question. The debtors may or may not have been responsible for their debts. It was a strict model with no “means test” or detailed analysis of every debt.[1]

But, while Old Testament lenders were admonished to be merciful, debts were canceled every seven years whether they liked it or not.

The Old Testament model can be legitimately applied to modern day bankruptcy laws. The principle is that, while taken seriously, debt can be canceled to achieve some higher purpose—such as the preservation of the family unit. (It also should be noted that Deuteronomy 15:12-13 provides that slaves should be freed every seven years creating an interesting analogy between the creditor-debtor and the master-servant relationship).

Interest on Debts:

This Biblical support for the legal right to cancel debt is enforced by the even stronger Biblical doctrine that prohibited interest of any amount rather than just usury or excessive interest.

The prohibition on interest is based on God’s covenant with Israel. The rule is again founded upon the compassionate treatment of various oppressed groups: the resident alien; the widow; the orphans; and the poor.

The Talmud quotes an ancient rabbi as saying: “It is better to sell your daughter into slavery than to borrow money on interest.” The Lord only knows what this same rabbi would say today if confronted with credit cards bearing interest rates of 34.99% and higher and with some “pay day” lenders demanding annual rates in excess of 2,000%.

The Biblical use of the term “usury” corresponds to our modern word “interest” rather than to the notion of “excessive interest” to which we generally apply the term usury today. Only a small number of us would seriously question the morality of profiting from a loan at normal interest rates.

The Biblical doctrine of usury rests primarily on three texts: Exodus 22:25; Leviticus 25:35; and Deuteronomy 23:19-20.

Exodus 22:25-27 states the law in explicit terms: “If you lend to one of my people among you who is needy, do not be like the money lender; charge him no interest. If you take your neighbor’s cloak as a pledge, return it to him by sunset, because his cloak is the only covering he has for his body. What else will he sleep on?

When he cries out to me, I will hear, for I am compassionate.”

Leviticus 25:35-37 provides that “If one of your countrymen becomes poor and is unable to support himself among you, help him as you would an alien or a temporary resident, so that he can continue to live among you. Do not take interest of any kind from him, but fear your God, so that your countryman may continue to live among you. You must not lend him money at interest or sell him food at profit.”

Deuteronomy 23:19-20 provides: “Do not charge your brother interest, whether on money or food or anything else that may earn interest.”

Other Books of the Bible also underline the importance of this prohibition on interest. For example, Psalm 15:5 characterizes a righteous man as one who, among other things, “lends his money without usury.” Both Ezekiel 22:12 and Nehemiah 5:0-11 condemn lending money with interest, especially to the poor.

And Ezekiel 18:13 lists the taking of interest among sins worthy of death.

The New Testament

Jesus Christ clearly had these Biblical principles in mind when he admonished the “money changers” and removed them from God’s house, the sacred Temple.

In John 2:14 Jesus “poured out the changers of money and overthrew the tables”. Jesus, in fact, was always true to the principles underlying usury and debt forgiveness and the notion of the importance of placing love and compassion above greed and wealth.

In Luke 6:34-35 Jesus said: “And if you lend to those from whom you hope to receive, what credit is that to you? Even sinners lend to sinners, to receive as much again. But love your enemies and, do good, and lend, expecting nothing in return, and your reward will be great, and you will be sons of the Most High; for he is kind to the ungrateful and the selfish.”

In Luke 6:37 Jesus said that God does cause the rain to fall on the just and the unjust and to “forgive and ye shall be forgiven”.

In Luke 16:9 Jesus said: “I tell you, use worldly wealth to gain friends for yourselves, so that when it is gone, you will be welcomed into eternal dwellings”,

In Mark 10:25 Jesus said that “[i]t is easier for a camel to go through the eye of a needle, than for a rich man to enter in to the kingdom of God”.

An Unholy Alliance: Congress, The President and The Big Banks

The current bankruptcy law passed by Congress and signed into law by the President in 2005 lacks any compassion for the poor, makes no redress to the modern day money changers who shamelessly peddle plastic at rates that would draw the Holy wrath of God himself, provides no relief but only additional misery to the families saddled with thousands of dollars in medical bills, and most importantly severely undermines the economic and social stability of the average American family.

These Americans are like the farmers of the Old Testament who proclaimed to King Nehemiah, “We have had to borrow money to pay the king’s tax on our fields and vineyards. Although we are of the same flesh and blood as our countrymen and though our sons are as good as theirs, yet we have to subject our sons and daughters to slavery. Some of our daughters have already been enslaved, but we are powerless, because our fields and our vineyards belong to others”. Nehemiah 5:3-5.

Nehemiah responded to his people and ordered to “let the extracting of usury stop! Give back to them immediately their fields, vineyards, olive groves, and houses and also the usury you are charging them…”. Nehemiah 5:11.

CONCLUSION:

The consistent teaching of both the Old and New Testaments is that compassion, mercy and justice are to override purely economic concerns, such as loans. Religious people are to be gracious to all, even debtors.

The compassion of the scriptures, including the setting aside of legitimate rights of lenders, was typical of economic relationships in the economy of early Judeo-Christian societies. The central theme is one of stability—a stable society with a guarantee of economic security to each family. Wealth was viewed as a blessing from God (Deuteronomy 8:11-18, 28).

This blessing resulted from obedience and was based on God’s compassion. The tithing for the poor, the gleaning laws, the year of the Jubilee, were all tangible ways that Israelites could show compassion for each other and honor God by following His law. Beyond income-maintenance programs, the Biblical Law provided a permanent mechanism—such as the Sabbatical year and Jubilee—to ensure that temporary misfortune barred no family from full participation in economic life.

(c) Michael H. Schwartz

Based on an article by O. Max Gardner, III, Esquire.

 


[1] This passage is similar to many other Old Testament commandments including Deuteronomy 5:17’s “Thou shall not kill” which provides no specifics nor creates no hierarchy of culpability.