Bankruptcy and the Bible
Many people worry about the ethics and morality of filing for bankruptcy. With this in mind, it is helpful to look at the actual language of the Bible and see how it treats the concepts of debt and bankruptcy.
Even 2,500 years ago, people got into debt problems. While Leviticus 25:39 makes it clear that people are generally expected to pay their just debts, this requirement must be balanced by the need for compassion and the requirement that debts be regularly canceled, found in Deuteronomy 15:1.
Deuteronomy 15:1 requires that debt must be discharged, or wiped out, on a regular basis: “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.” Whether the debt had been partially paid was not important, and liability didn’t matter at all—it was a strict statement without any wiggle room, much like the clear statement in Exodus 20:14 that “Thou shall not commit adultery.”
The Old Testament called for the cancellation of debt every seven years whether a lender was happy about it or not—it didn’t give a choice, it merely commanded. The belief behind this requirement is that debt can be canceled to achieve some higher purpose—such as compassion. In fact, this seven-year forgiveness is so important that when Congress adopted the modern Bankruptcy Code, it named the section allowing for the discharge of debts after it: Chapter 7.
The Bible on Interest
The Biblical use of “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.
Exodus 22:25 states “If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury.” Leviticus 25:35 says, “[I]f thy brother be poor and fallen in decay with thee; then thou shalt relieve him: yea, though he be a stranger, or a sojourner; that he may live with thee.” Deuteronomy 23:19 says, “Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury.”
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 list the taking of interest among sins worthy of death.
The prohibition on interest is based on God’s covenant with Israel and upon the compassionate treatment of various oppressed groups: the resident alien; the widow; the orphans; and the poor. 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 companionate.” 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.” Finally, Deuteronomy 23:19-20 provides: “Do not charge your brother interest, whether on money or food or anything else that may earn interest.”
The New Testament also addresses money lending. Jesus 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 the prohibition of usury and required 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.” Jesus’ followers were to be concerned with the welfare of others, even when met with hatred and abuse.
Many versions of the Lord’s Prayer contain a specific reference to these biblical precepts: “Forgive us our debts, as we also have forgiven our debtors.”
The consistent teaching of both the Old and New Testaments is that compassion, mercy and justice override purely economic concerns, such as loans. Religious people are to be gracious to all, even debtors. 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 into the kingdom of God”. And in Luke 16:9 he 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”, and to “forgive and ye shall be forgiven” Luke 6:37.
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.