Bankruptcy and the Bible

I am a lawyer and I often feel I should apologize for thinking like a lawyer. This is mainly because thinking like a lawyer leads me to speak like a lawyer and that can be a real problem. However, every once in a while there is a benefit to thinking and speaking like a lawyer. Today, it was a benefit. I was reading my Bible and thinking about bankruptcy. Doesn’t everyone? I wasn’t thinking about a personal bankruptcy but about bankruptcy in general. Mainly, I was contemplating that connection between the Bible and bankruptcy because I read Colossians 2: 13-14: “When you were dead in your sins and in the uncircumcision of your flesh, God made you alive with Christ. He forgave us all our sins, having canceled the charge of our legal indebtedness, which stood against us and condemned us; he has taken it away, nailing it to the cross.” That, for those of us who think about bankruptcy, our own or others, is amazing good news.

If you are not familiar with the process of a bankruptcy, the short explanation is that it is a statutory creation (meaning conceived by a legislature) by which an individual or an organization can repay or diminish all or some of the debt of that person or organization under the protection of the bankruptcy court. Essentially, the court looks at all the debt, all the assets, recognizes that the individual or the organization is overwhelmed by debt and then figures out an equitable (to the creditors) and manageable (to the debtor) way for the individual or the organization to be relieved of the debt; in some cases, the court will “forgive” the debt entirely. For simplicity sake, let’s just refer to individuals in bankruptcy only.

Statistics compiled by the Bankruptcy Institute show that in the first quarter of the year 2012, 355,000 people have filed bankruptcy, which was down about 12 percent from the same period of time in 2011.  For the year 2011, 1.37 million people filed bankruptcy, which was less than the 1.55 million people who filed bankruptcy in 2010. http://www.bcsalliance.com/bankruptcy_statestats.html. In 2015, the number was approximately 819,240 bankruptcies filed nationally. Thus, the trend is slowing down. Nonetheless, that is a lot of bankruptcies.

Many people have a friend or family member whose unbearable financial stress has been relieved through use of the bankruptcy code. And certainly, it is a legal, legitimate means of getting out of debt. What’s the catch? Why wouldn’t everyone under financial strain take that route? One reason is that the person who declares bankruptcy carries that bankruptcy on their credit report for the next seven years making it difficult to get new credit, get a loan, buy a house or a car. Thus, even though the law gives a pass, it is a pass with a price. The debtor still “pays” for seven years after filing for bankruptcy. No new credit-essentially, creditors don’t trust the debtor until the price (the seven years) has been paid.

And yet, as we see from the statistics above, a lot of people and organizations elect bankruptcy as a good option, or as the only option.

Interestingly, there are people who, while being legally relieved of the debt, feel a moral obligation to repay creditors even after being declared bankrupt. Thus, even though the law gives them the individual a pass on repayment, something in the heart of the individual drives them to want to pay the debt back since it was most often a debt rightly incurred. This is not a legal obligation. The drive, or sense that the obligation should be repaid, is actually borne out of moral compunction. i.e. “I bought it. I could not pay for it. I have what I bought and I should pay for it even if not on the terms that I originally agreed to, and even though the law says I no longer owe that money.”  In other words, the legal debt is relieved but the moral debt, the need to “do the right thing” is not relieved. That points to something deeper inside us than what a statute or a law can fix.

We do not all struggle with overwhelming financial debt. But, we all have a moral debt. We have all screwed up. The Bible calls that sin. And like financial debt or credit cards, the time to pay eventually comes. For those who have sin (all of us) the payment comes as death, temporally and eternally. So what can we do when we recognize our own desperate situation morally and/or spiritually? Is there a bankruptcy code that relieves us of our debt, of the sense of condemnation, of the guilt and the shame, let alone the seven years bad credit record? Who really wants to have the past brought up again and again, a constant reminder of our screw ups? Not many.

The good news is that there is a way out of our spiritual indebtedness. That way is not a way conceived by a legislature nor implemented by a court. In fact, the way to relief of personal moral indebtedness is counter intuitive; it is through someone else being publicly shamed and someone else paying for all our debts. The way out is through the blood sacrifice of Jesus on the cross. That payment completely takes away our indebtedness and removes the legal obligation. That is better than bankruptcy. The blood sacrifice of Jesus on the cross is far better than a spiritual bankruptcy code (which some would call the law). The difference between a spiritual bankruptcy code (the law) and having a debt paid off, is that the former may cover the debt superficially, but does not forgive the debt morally or take away the shame or guilt. Someone else paying the debt completely, as Christ did, leaves us not only legally free but morally free from attempts at or compunction to repay. What is incredible to me is that the indebtedness is completely paid. That means no calls, no seven year credit ding, no guilt, no shame, no looking over your shoulder wondering how you can pay back the debt. It isn’t just that someone found a way to pay the debt back in part, or over time, or at the creditor’s loss. The debt is paid in full now, completely.

When I read this verse, I thought about it immediately in terms of what I would say to a client: “You are not going to believe this: someone actually paid your immense debt at no cost to you but at tremendous cost to himself. You owe nothing to your creditors but everything to the one who paid the debt. The case against you is closed. The debt is paid in full.” What client would not jump at that opportunity? What client would not want to know who the beneficent person was? What client would not immediately feel relief, gratitude and perhaps delirious joy at such news?

Likewise, when confronted with my spiritual bankruptcy, why would I not jump with joy at the good news that my debt has been paid in full, immediately freeing me from the debt, the guilt, the shame and the seven years of it constantly being thrown into their face. Such is the good news we know and share, lawyers and non-lawyers alike.