You won’t go to Hell if you declare 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. 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 no way they can ever climb out.
That’s when thoughts start turning to declaring bankruptcy.
Consider Bankruptcy Advice Wisely
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, filing bankruptcy seems like the easiest solution to a difficult problem.
When this happens, it’s easy to seek money management advice from people such as bankruptcy attorneys and other professionals. But they have a vested interest in your filing for bankruptcy and may not have your best interests at heart.
Before you seriously consider filing, let’s take a look at some things you should consider before you take that step.
What Does the Bible Say About Declaring Bankruptcy?
Although the Bible doesn’t directly address bankruptcy specifically, it does warn against not paying back debts. A couple of examples are:
“The wicked borrows and doesn’t pay back, the righteous is gracious and gives” –Psalms 37:21
“Better you should not vow, than vow and not pay.” –Ecclesiastes 5:5
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. 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 get into a bad debt situation to begin with. 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.
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.
I recommend “Financial Peace” and “The Total Money Makeover” by Dave Ramsey (affiliate links). 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 is 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 when you're dealing with money problems.
Find a Way to Avoid Filing 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 your debt ensures that you create new behaviors to carry you forward and so you NEVER return to that situation again.
Filing Bankruptcy Should Be a Last Resort
Bankruptcy is an extremely 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
13 Better Money Habits You Need to Get Out of Debt
How Do You Get Out of Debt?- Get Mad and Naked
How to Pay Off a Mountain of Medical Debt
Just want to say that some consumer lawyers have your best interest at heart and will try to provide alternate solutions based on your individual situation. I know many good Christian attorneys. It is unfair to judge them as all being out for their own gain.
So what happens if you already have very good financial habits and STILL get into debt? Every article I read about Christians and debt always ends up saying it’s YOUR fault! In our modern world, you can work your butt off, have no credict cards, not spend a penny on yourself and still fail financially. If God thinks that’s bad, then I’ll become an atheist. The truth is, if you don’t file for bankruptcy, your creditors will keep on and on and on at you, hiking up the interest rates until you jump off a cliff. You can file for bankruptcy AND try your best to pay back your debts. There a millions out there in debt through no fault of their own so less of the guilt crap from people who are rich, thanks!
Wow. That Tom P is definitely spirited. LOL! Good question. Given your study, I wonder if bankruptcy means that debts are forgiven and thus the ‘wicked not to repay’ criteria doesn’t apply? What do you think? Kind of like a debt settlement, the debt is forgiven. One could also do as Dave ramsey claims he did an repay everyone even after he bankruptcy finished. Use the tool as a time to get right financially. Speaking of Jubliee (was reading the comments), there’s a group by that name that is buying up student debt in default and forgiving it. Trying to get in touch with the group. Sounds like a wonderful mission – I think.
That’s an interesting question. I guess if you have to have the debt forgiven, it’s better than not repaying but worse than paying in full. As for the group that’s paying off student loan debt, I don’t think it’s something that could work on a large scale, but it’s an interesting movement. I think the only thing that will work on a large scale is political action. Of course that’s very difficult and slow solution, but I believe that’s probably the only way to solve such a huge problem.
Wouldn’t you say God built in his version of bankruptcy into the Hebraic law with the "Year of Jubilee"?
I see what you’re saying, but I’m not sure that would really be bankruptcy, because I think the year of jubilee would apply to everyone with a debt, not just those who can’t pay it.
No, it wouldn’t "really" be bankruptcy; but, the point seems to be that God tends to be more forgiving of debts and bankruptcy than we seem to be.
Right, bankruptcy is certainly not a sin, and God is ALWAYS a forgiver. People, not so much!
hi there. thanks for sharing this. The early the better you file bankruptcy so that all your property will be save.
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Yes, They should file bankruptcy , Because we christian mostly suffering in bankruptcy, and it is good to file for that. But before filing bankruptcy it is most advisable that you have financial adviser, bear in mind that your income is important not only to means testing and whether you fall above or below median income, but also in figuring out how much money you have left over at the end of each month for debt payment
It’s All Bull , I had to file bankrupcty because GOD didn’t come true on his promises , Was doing great at paying down than GOD allowed my job to get lost , reduced my disability pension , took all I had in bank to live for a year ,Never came back to me ten fold , give in secret and god rewards you in secret , BULL the Bilble is a book of conduct with good stories and a lot of MT promises , with all thats going on in the world God dosen’t exist !! has anyone in Your church had a spontenous healing ?? Hell no , yet we are thank full on a slow death …iot’s all bunk and I say that after 40 years of disappointments , oh it will get better cause god wants the best for you !! well no other half , no business , no promotion , no kids .a crsppy car all my life and all endovers failed .. so live long and prosper as it’s just a way to live without hope , and we are stupid enough to believe it … HOPE ? Take the H out and replace it with a D..
Well, you certainly have your opinion. However, I can tell you from my own personal experience that trusting in God really does work. My life has been tremendously blessed because of my belief, and because of my action that supports that belief. As human beings, we will always go through trials and tough times. It’s part of being a human being. But it’s how we react to those trials that determines whether things get better, or we just keep going round the same mountain over and over. Belief in God has to stay intact even during tough times, and that belief has to be backed up with action. You can’t sit around and wait for your blessing to fall out of the sky. God recognizes belief AND action and will eventually see that things fall your way, maybe not in your time frame, but in the due season that He determines. As for healings, yes, there have been several in my church, including my own just this year. You can read about it in a series of posts I just started beginning with this one: So you can believe it’s bull if you want, that’s your right. But I know what I’ve seen and experienced. There is always hope in any situation, provided you trust and believe. Dope? Not me.
First, how is it you say God did not come true on HIS promises? Are you sure it wasn’t YOUR promises YOU did not come through on? How is God responsible for your actions or inactions? Second, I find it interesting you say God did not come through on his promises. What promises did he not come through on? Did God promise you that you would not lose your job? That bad things would not happen? Come to think of it, I do recall God promising us that we would have tribulation in this life. Third, I see that you say God gave you money to live on for a year. But, you are so ungrateful for providing it, you blame him for taking it away, rather than thanking him for giving you money when you needed it? Now, I have to ask you, what I always ask myself, when I find myself in a bad situation that I caused: How’s that working out for you, going it alone, without God? You can blame God all you want; but, reality is, we generally put ourselves in our situation. And, yes, you are correct in one point: God DID allow it. Why? It’s because God allows us free will. How would you be ranting if God did not allow free will? You’d undoubtedly be miserable, because you had to do what he demanded of you. You think that God does not exist, because you are miserable? I guess that makes sense. But, I’m not sure how God’s existence is dependent on your happiness. So, if you live a happy life God exists, but, if you are miserable, God does not? Does that mean, he only exists to those who are happy? And to the rest, he does not exist? "I’m miserable, God, so you don’t exist. Make me happy, and you’ll exist". Yeah, I can see how that makes sense.
Wow, Job had friends like you!
God took it all from Job too and for his faithfulness restored him to a greater wealth than he had even imagined! It sounds like you are angry, and that is ok, but God gives and He takes away for reasons to lead us closer to Him, not the other way around.
Hi I liked your article, what is your advise on bankruptcy due to loosing my job three months ago and my car being repossessed?
Obviously, you should find a job as quickly as you can to get some income. In the meantime, explain your situation to your creditors and buy as much time as you can explaining to them you intend on paying your debt as soon as you can. Then, come up with a plan by making a budget and a get out of debt plan using the forms available in the "Budgeting Forms" tab at the top of the page. The important thing is that you start living your life differently by keeping track of your money and being prepared for things like a job loss or an illness that can hurt you finanicially.
Again, you’re supposing that the peopel in question are doing something WRONG in their lives, moneywise. What did kalwel do wrong? Maybe he had a good budget plan already? Again, that sense of guilt comes through: you get in debt, it’s your fault! It’s called a rich guy’s point of view.
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!
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?
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.
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.
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!