Billy Graham thinks you should be chatting with God about filing for bankruptcy. And though I’m not opposed to seeking counsel when confronting life-changing decisions such as bankruptcy, I’m more of a pragmatist when it comes to matters of the checkbook.
Though Graham notes that there’s nothing in the Bible to say that bankruptcy’s immoral, invoking God speaks more to morality than anything else. Your relationship with your deity of choice helps shape your thoughts of right and wrong, good and evil, morality and lack thereof.
I’m not telling you that it’s a bad idea to make peace with your financial situation – that’s clearly a prerequisite for filing bankruptcy (in fact, for doing anything in this world). But the solution you choose for your financial situation should be based on hard facts and the scope of the law.
Filing for bankruptcy is legal and sanctioned by the government. It’s a way to give people and companies a way to reorganize their finances and to re-enter the stream of commerce. In fact, the U.S. Supreme Court itself has said that a central purpose of the bankruptcy law is to “provide a procedure by which certain insolvent debtors can reorder their affairs, make peace with their creditors, and enjoy ‘a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of pre-existing debt.’” Grogan v. Garner, 498 US 279 (1991) (citing Local Loan Co. v. Hunt, 292 U. S. 234, 244 (1934)).
The law is limited to use by the “honest but unfortunate debtor,” which means you can’t walk into bankruptcy if you’ve cheated or stolen. If there’s morality at play at all, that’s the scope of it. I’m sure Billy Graham realizes that.
You may think that various government officials are immoral or have done bad things, but that doesn’t translate into an immoral government on the whole. If it did, I’m certain that some members of Congress would have either sought to outlaw bankruptcy or would never have run for office in the first place.
Bankruptcy is an issue of money, the rights to which are determined by contract and the law. Contractual obligations are not moral ones, but are those decided by the parties. We can argue that buying a house at a price you know is too long is immoral, but it isn’t – it’s a matter of contract and bargaining.
When a contract goes sour, you rely on the legal system to decide not only who’s right and who’s wrong, but the recourse that the wronged party can expect. Got a gripe? Take it to the judge.
In matters of bankruptcy, there’s a balance act. Creditors want everything, debtors don’t have the wherewithal to pay immediately. The bankruptcy laws determine what you need to pay, whether you are required to give up property, and how the process will treat you.
That’s equitable, fair and just. It also happens to be moral.
In the end, I hold fast to the proposition that the decision to file for bankruptcy is one that involves a hard look at your personal financial situation. Can you pay the debt, in whole or in part? If not, what’s best for you and your family within the confines of the law?
Decide accordingly, then move on.
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Jay, I want to take your last point about whether one CAN pay the debt and expand. As a bankruptcy lawyer, I see people who CAN continue to make minimum payments on their debts. A look at the statement will tell them how many DECADES it will take to retire the debt that way.
My question to clients is whether they SHOULD continue to make payments: what are they neglecting of importance in order to drip water on the stone of their debt? If they don’t have emergency funds; health insurance; and provisions for retirement, then my question is whether their priorities are in order.
Good point, Cathy.
There’s also a provision in the Old Testament advocating something very like bankruptcy — the forgiveness of debt every few years. Can’t remember the specific book, chapter, and verse right off and.
Annie, I think you’re talking about Deuteronomy 15:1-2 – the release of debts every seven years. Some claim that the seven-year period is the basis for Chapter 7 (as opposed to calling Chapter 6, for example) but I have yet to find credible evidence to support such a claim.
I get this question from clients quite often. Contrary to what many believe, bankruptcy is usually a very painful decision for people to make. I usually tell them that one, the law provides for it and two, I believe there is a difference between the debtor that has incurred debts (sometimes foolishly) and now cannot pay because of a lost job, reduction in income, or medical problem, and the debtor that incurs debts with the thought that they will simply file bankruptcy once the spending spree is over. And I point out, that I almost never run into the latter type of person. Most debtors do fall into the the “honest but unfortunate” category.
Another point, John, is that sometimes people could pay the debt itself if the creditor: (a) didn’t charge outrageous fees and interest; and (b) treated the consumer with dignity and respect during the collection process, working to resolve the issue rather than backing the consumer up against the wall.
In all fairness, Billy Graham believes you should pray about every decision. He is being consistent. If you are a person of faith, it is something I’d suggest as well, and have in my practice.