Should Christians Declare Bankruptcy?

by Jason Cabler · 6 comments

You won’t go to Hell for filing bankruptcy, let’s just go ahead and get that off the table first.

Now, with that said, I want to address a question I’ve been asked many times, thus the title of the post.

When it comes to being in debt, some situations are much worse than others.  Most households in America have at least some debt.  However, some households have so much debt they feel there’s absolutely no way they can ever climb out, that’s when thoughts start turning to bankruptcy.

Opt in to Email Updates RSS

Whether you just got crazy and ran up a ton of consumer debt or you have huge medical bills, when your financial situation turns desperate, bankruptcy can seem like the easiest solution to an extremely difficult problem.  When your situation is this difficult, it’s easy to seek advice from people such as bankruptcy attorneys and other professionals that have a vested interest in you filing for bankruptcy and may not have your best interests at heart.

But before you seriously consider filing, let’s take a close look at some things you should consider before you take that step.

What Does the Bible Say About Bankruptcy?

Although the Bible doesn’t directly address bankruptcy specifically, it does warn against not paying back debts. A couple of examples are Psalms 37:21:

“The wicked borrows and doesn’t pay back, the righteous is gracious and gives”

And Ecclesiastes 5:5:

“Better you should not vow, than vow and not pay.”

And there are other verses that reflect those sentiments as well.  So to put it bluntly, God doesn’t like it too much when you don’t pay off your debts, and if you’re a Christian, obviously you want to be in good standing with God (Life tends to be so much easier that way).

Pray About It

Therefore, when you get into a tough financial bind, begin going to God with it and pray for His direction and favor over your situation.  He can direct you toward a solution that you can’t see for yourself if you’re not trusting in Him.

Putting your trust in Him to guide you through your situation and begin doing things His way will catch His attention.  Doing things your way is usually how you got into a bad debt situation to begin with, so giving it over to Him will definitely bring favor in that situation.

He can make a way for you where there is no way, and He will always bless you for doing the right thing.

Opt in to Email Updates RSS

Educate Yourself About Debt

Read what the Bible says about debt and how to handle money (I’ve listed some verses at the bottom of the post to get you started).

You should also read books and even take courses about how to get out of debt and use money wisely.  Of course my “Celebrating Financial Freedom” self study course is a great place to start learning to see money and debt differently and begin the process of getting out of debt.  I also recommend “Financial Peace” and “The Total Money Makeover” by Dave Ramsey.  The more educated you become about your money, the wiser decisions you tend to make.

Get Good Advice About Your Debt

Get advice from the right people.  Seeking advice about debt from a bankruptcy attorney or a debt consolidation company are usually not a good idea because they have a vested interest in profiting from your situation.  Find someone you know that handles their money well, especially someone who is out of debt, and ask their advice.  Many churches, especially larger ones, even have financial counselors available on staff that can help lead you in the right direction.

Opt in to Email Updates RSS

Find a Way to Avoid Bankruptcy

Working your way out of a tough financial situation requires time, effort, and most of all, changes in behavior.

If you declare bankruptcy, there is nothing in that process that changes the habits that got you there in the first place.  However, learning to budget, creating extra income, and doing everything humanly possible to pay off those debts ensures that you create new behaviors that will carry you forward and allow you to NEVER return to that situation again.

Bankruptcy is a very emotional process equivalent to experiencing a divorce or the death of a loved one, and is truly a last resort financially.  It’s really necessary only a very small percentage of the time.  But if you are a believer and you do decide to go that route, remember to trust your creator, and remember that He is a loving and forgiving God.

He will see you through any situation no matter how bleak, giving you a hope and a future as long as you put your trust and belief in Him.

Recommended verses: Proverbs 21:12, Proverbs 22:7, Proverbs27:23, Psalm 20:4, Proverbs 22:26-27

Related blog posts:

5 Ways to Make Extra Money, Even in a Tough Economy

Another 5 Ways to Make Extra Money, Even in a Tough Economy

How Do I Start a Budget?

How Do I Start a Budget? (Round 2)

 

Related posts:

Tagged as: bankruptcy, bankruptcy attorney, christian bankruptcy, debt, debt management, declare bankruptcy

  • Pingback: Eat Your Peas

  • http://twitter.com/DebtChronicles Travis Pizel

    There are also other debt relief options out there such as Debt Management Programs – which is actually the path I chose to eliminate my debt.  The creditors give me a fixed payment each month at a reduced interest rate, in exchange for that, I have to make consistent payments until my debt is paid in full or I get kicked off the plan.  Also, my accounts are closed and can no longer be used.

    My wife and I are 33 months into a 5 year program…in a little more than 2 years we will have paid off all our credit card debt!

    • http://www.CFinancialFreedom.com Dr. Jason Cabler

      That’s definitely one option that can be used, but you have to be very careful you don’t hook up with one of these companies that charge huge fees and are more about taking your money than providing any real help.

      I’ve seen on your blog that you seem to be having a positive experience with debt management, what kind of fees do they charge?  Have they been helpful with their service?  Are there any negative experiences that you’ve had?

      • http://twitter.com/DebtChronicles Travis Pizel

         You’re right…as with any service you do have to ensure that you hook up with a reputable company that is looking out for the best interests of their customers.   The company that I enrolled with (CareOne Debt Relief Services) bases their fee on how much debt you have.  My fee per month is the maximum – $50 per month.   However I’m saving many times that each month in interest alone by being in the program.  I have nothing but positive things to say about my experience with the company and their program.  The one thing I will say is that people looking to enter a debt relief program need to understand exactly what they are getting into, what to expect, and what is expected of them.  Without that knowledge people will fail.  Debt relief programs are not a “magic debt pill.”  You cannot  just make a phone call and expect everything to be taken care of.  If  Customers stay involved in their program and do their part (which I am),  you will be successful in eliminating your debt.    But even  more than that, people need to look at how they will keep themselves from getting into debt.  A true credit counseling program will provide tips and tools to help customers learn how to budget, save money, and live within their means.  CareOne does that as well.    I apologize if this sounds like a commercial, but it is truly my genuine experience with debt management.  There are many paths to eliminating debt – this is just one of them, and it  certainly isn’t the right choice for everyone.   Every individual situation is different – and it’s important that people examine their own situation, explore their options, and make the right choice for them…whatever it may be.

  • http://www.debtblackhole.com/ Dave Hilton

    If you can’t find an alternative to Bankruptcy & your faith won’t allow you to NOT pay- then the best option may be Chapter 13 Bankruptcy. When we had to file, that’s what we did- because I was determined to PAY OFF our creditors.

    We had to use every last cent of extra money to make that trustee payment…but knowing we paid our debts was worth the sacrifices.

    • http://www.CFinancialFreedom.com Dr. Jason Cabler

      Working out a deal with your creditors and receiving some mercy from them is definitely better than just not paying.  It helps to keep some of your dignity intact because you actually pay back at least part of the debt, and it takes some amount of discipline to get that done.

      Congrats on getting it paid back!