Video Transcript

Over the years, I received many counseling calls from people that have basically the same question, and that question relates to, “Is bankruptcy Biblical?”

I usually have to go on to describe to them that bankruptcy is a man-made legal process that has enabled us in this day to be able to avoid putting people in debtors’ prisons like when on in Biblical times. God also made provision that that was really what our bankruptcy laws came out of for the Israelites.

The Israelites were told that after seven years of debt, they were supposed to forgive the debts of their brothers. That gave them the fresh start and an opportunity to move forward. Still, the intent God has always had is just that people are to repay their debt. Psalm 37:21 teaches, “The wicked borrow and do not repay.” God desires us to find a way to repay our debts, if at all possible. Many people use bankruptcy instead to avoid paying debts going forward.

They wipe out their debt, and then, they never look back, and never think about repaying those obligations that they had made. That wasn’t the case for a friend of mine named John. John, when he graduated from college, went to work for his family business. The very first day back, of all days, he found out that his company had been forced into bankruptcy.

His father resigned and turned the company over to John. John was faced with bankruptcy and millions of dollars of debt. He decided that he really wanted to do it Biblically, and he wanted to do it in a way that would be as honoring to God as he could in that terrible situation.

The bankruptcy court had a plan for the creditors, and the creditors, most of them, only received 30 cents on the dollar. They had to write off 70 cents of every dollar that was owed to them. They ended up that John decided that he really wanted to repay those debts, even though, the bankruptcy court said he had no further legal obligation to.

John turned that company around, and he began stockpiling cash to pay all his creditors. It took him 13 years, but after 13 years, he went to every one of those creditors, and paid them the remaining 70 cents on the dollar. He glorified God, and God was praised all throughout the industry, and through the way that John handled that amazing situation.

There are some people that are in such deep debt and have such a trying situation with business failure that they may never be able to dig out and be able to repay all of that debt. We want for them that they realize that Jesus also has grace. John 1:17 says, “For the law was given through Moses. Grace and truth came through Jesus Christ.” We need those people to feel free enough that they can move forward, as long as they’ve done their best, and they just plain aren’t able to repay.

The bottom line is, bankruptcy is really a last resort. Try all ways possible to reconcile with your creditors, and find ways to work out your debt. But sometimes, bankruptcy is necessary to bring order to a chaotic situation, so that all creditors can be treated fairly and that there is a clear path, and plan for people to be able to start over with their life.

If God blesses you after bankruptcy, when possible, look back and repay those people. I believe if you do that, you will please God, and you will bring honor and glory to His name in the process.

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