Is It OK for Christians to Declare Bankruptcy? (2024)

FAQs

Is It OK for Christians to Declare Bankruptcy? ›

Even though the Bible has several verses about money, it doesn't specifically mention bankruptcy. But, it does tell us that we should pay back what we owe… The wicked borrows and does not pay back, but the righteous is gracious and gives. It is better that you should not vow than that you should vow and not pay.

God's Perspective on Bankruptcy

The Bible never prohibits bankruptcy, but it does discourage it. Psalm 37:21 reads, "The wicked borrow and do not repay, but the righteous give generously." We should make every effort to avoid bankruptcy.

Is Filing Bankruptcy Immoral? Whether filing for bankruptcy is immoral is subjective and depends on individual perspectives and values. From a legal perspective, bankruptcy is a right provided under the law to help individuals or companies facing insurmountable debt.

Bankruptcy, like several other legal actions, is a tool – one that provides a solution for those faced with a difficult situation. For this reason, among others, you should not feel guilty about filing for bankruptcy.

After all, if you choose to file bankruptcy, it could have a detrimental impact on your credit score for years to come. For example, chapter 13 bankruptcies typically stay on your credit report for seven years while chapter 7 filings can stay on your credit report for up to 10 years.

Credit Will Be More Expensive and Limited. After declaring bankruptcy, you'll have to work hard to raise your credit score. You will likely face limited access to credit and very high interest rates until you can rebuild your financial reputation.

However, courts have found relevant indicators of bad faith to include: The debtor is filing to avoid one large single debt or to evade one creditor. The debtor has filed incomplete or inaccurate financial schedules. The debtor filed at a time that suggests an intent to delay or frustrate creditors.

No, it is not a sin, presuming that you do nothing illegal to hide your financial assets and that you cooperate with the relevant civil laws about bankruptcy.

What does life after bankruptcy look like? You'll have to endure hardships — from cash flow management to establishing good credit and rebuilding your credit profile — but it's possible to financially recover from bankruptcy and give yourself a fresh start.

Bear in mind that a bankruptcy will remain on your credit record for seven or 10 years and make it difficult to borrow in the future. Bankruptcy can also mean higher insurance rates, among other negative consequences.

Why shouldn't I file for bankruptcy? ›

Your Credit Score Will Likely Suffer

Bankruptcy is recorded on your credit reports and remains there for seven years from the filing date for Chapter 13, or 10 years from the filing date for Chapter 7. A bankruptcy on your credit reports has a deep, long-lasting negative impact on your credit scores.

Not all debts are discharged. The debts discharged vary under each chapter of the Bankruptcy Code. Section 523(a) of the Code specifically excepts various categories of debts from the discharge granted to individual debtors. Therefore, the debtor must still repay those debts after bankruptcy.

They think they are a bad person for even thinking about filing for bankruptcy. While these feelings are real, they are unwarranted. Debt problems are nothing recent. The historical basis of bankruptcy can be found in the Bible.

Debts not discharged include debts for alimony and child support, certain taxes, debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit, debts for willful and malicious injury by the debtor to another entity or to the property of another entity, debts for death or personal ...

Economists say some don't file because collectors aren't aggressively pursuing them, while others may strategically delay filing because bankruptcy could benefit them more down the road.

In fact, those who file for bankruptcy do better financially than those who continue to struggle with their current debts, according to a study by the Federal Reserve Bank of New York. Bankruptcy is a move that provides better stability for long-term planning.

Some Christians feel bad that their creditors will not be paid. Others believe that the Bible condemns bankruptcy. It does not do so; it actually embraces the concept. In the United States of America, our founding fathers recognized the importance of being forgiven for debt.

Matthew 5:3

Being poor in spirit is a far cry from being strapped in one's financial circ*mstances. Poverty of spirit is a change in a person's heart made by the great God Almighty when He awakens the mind to His reality and begins revealing the greatness of His person and purpose.

For instance, Chapter 7 bankruptcy covers or "discharges" credit card balances, medical bills, past-due rent payments, payday loans, overdue cellphone and utility bills, car loan balances, and even home mortgages in as little as four months.

Exodus 22:14 - If anything is borrowed, it should be paid back. If what is borrowed is lost or injured, full restitution must be made. Ps 37:21 - The wicked borrows but does not pay back, but the righteous is generous and gives. The Bible is clear that when something is borrowed is should be paid back.