Bible and Bankruptcy, Part 1 by Bankruptcy Attorney in St. Louis Tobias Licker
What does the Bible tell us about bankruptcy? The authors of the Bible didn’t know about Chapter 7 and Chapter 13, however, the question what happens if a debtor cannot afford to pay back his debt is older than currency itself. One of the first known currencies, barley and shell money, were used as early as 3,000 years BC. With the use of money comes the option of lending and borrowing money; and the question of what to do when an obligation to pay cannot be satisfied?
Many of the Bible verses are familiar and are applicable to the financial situation today. Leviticus 25:14 says: “If you sell land to one of your countrymen or buy any from him, do not take advantage of each other”. Sound familiar? This seems to have been to problem that caused the mortgage crises in 2009. Houses were sold to families who were not able to afford them and under conditions that required refinancing at a later time under unknown conditions.
The general rule is to help a person who is poor and unable to support himself. Leviticus 25:35 “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 he can continue to live among you.”
The Bible even gives instruction to creditors on how to comply with the general rule of helping each other so that no one is forced into slavery or unable to support himself and his family.
A number of clients, even bankruptcy attorneys are under the mistaken belief that the waiting period between two Chapter 7 bankruptcy cases is 7 years. This is wrong. Before the law changed in 2005 the waiting period was 6 years, and after the new law took effect the waiting period is now 8 years. So I ask, where is the widespread belief that it is 7 years coming from?
Does it come from the fact that this kind of bankruptcy proceeding is dealt with under Chapter 7 of the United States Code. To file a chapter 7, you would have to wait 7 years? If that would be the reason, why don’t we hear from clients and attorneys that you would have to wait 13 years to file a new Chapter 13 Bankruptcy case, or 9 years in order to file a second Chapter 9 Bankruptcy case. It does not seem to come from the number of the Chapter.
It comes from the Bible itself:
Deuteronomy 15:1, The Year of Canceling Debts: “At the end of every seven years you must cancel debts.” The reasoning behind this command seems to be clear: To avoid that more people falling into poverty. When citizens become so poor, that they are not able to support themselves and their family, they must rely on others. Criminality will increase with the percentage of poor people in a society. It makes sense for a society to avoid that too many people fall into poverty. Deuteronomy 15:7 says “If there is a poor man among your brothers in any of the towns of the land that the Lord your God is giving you, do not be hardhearted or tightfisted toward your poor brother. 8Rather be openhanded and freely lend him whatever he needs. 11There will always be poor people in the land. Therefore I command you to be openhanded toward your brothers and toward the poor and needy in your land.” Do Creditors read or follow the Bible? The commands of the Bible help keeping the social peace within a society. However, these rules are directed at individuals. A national operating payday-loan company might not have a conscience and has the purpose to maximize its profit.
The current political discussion about class warfare and the question whether the rich should pay more of their share to the society is as old as the Bible.
However, the commands we read in Deuteronomy are even more favorable than the bankruptcy rules today. In Deuteronomy 15:1, the debt is cancelled automatically every seventh year. The bankruptcy law became so complicated that it is nearly impossible to file a bankruptcy case without the help of an attorney. Filing bankruptcy costs money: court costs, required credit counseling, and attorney fees. In addition, the bankruptcy law requires a debtor to do a means test which determines if one actually qualifies to file a Chapter 7 bankruptcy. If the debtor “fails” the means test, he will need to file a Chapter 13 bankruptcy case and possibly repay some of the debt to his creditors based on his disposable income.
Part 2 if the Bankruptcy and Bible article will follow.