Should a Christian File Bankruptcy?

Should a Christian File Bankruptcy?

The short answer is yes. Bankruptcy is not a sin and bankruptcy is not the problem. The problem is caused by behaviors such as living beyond one’s means, or failing to exercise wisdom in spending decisions. The solution to poor stewardship and extravagant spending is to ask God’s forgiveness and He is faithful to forgive all our transgressions. 1 John 1:9 [1]. The solution to overwhelming debt is bankruptcy.

Conversely, when a Christian through no fault of their own finds themselves with overwhelming debt, again bankruptcy is the solution. Remember God promised that he would never put more on us than we can bear but with every temptation he would make a way of escape 1 Corinthians 10:13 [2], bankruptcy is legal the way out of debt problems.

A Christian should not feel guilty about filing bankruptcy given that the Biblical principles of grace and forgiveness are mirrored in the bankruptcy process.

Grace is God’s unmerited love. We cannot earn God’s love nor do we deserve it, yet God loves us anyway. Likewise, some people have been irresponsible with their money and are probably not deserving of the benefits of bankruptcy. Yet anyone, deserving or not can have the benefits of a bankruptcy discharge… and this is legislative grace.

When God forgives a person’s transgressions they get a new start with a clean slate. Their transgressions are canceled and forgotten. 2 Corinthians 5:17 [3]. Likewise, a discharge of one’s debt in bankruptcy gives the debtor relief from the obligation of paying their creditors giving them a new start financially.

Further, how can Bankruptcy be bad when God gave bankruptcy to his chosen people the nation of Israel. In Deuteronomy 15:1-18, the seventh year is the LORD’S Release, and all debts are to be forgiven. The reason for this law is to relieve the poor. So every seven years the Israelites would grant their countrymen a discharge of all their debt. Interestingly, the bankruptcy code limits a debtor to filing a bankruptcy once every seven years.

Therefore, a Christian should not feel guilty for seeking debt relief through the bankruptcy process. The benefits of bankruptcy are demonstrated in both biblical principles and practices.

There is a pattern that emerges in the Bible. God has repeatedly turned disaster into a blessing. Innumerable times God has taken a hopeless situation and turned it around to bless His people and give glory to His kingdom. Remember God works through people and God can use bankruptcy to achieve a financial a turnaround for Christians.


[1] 1 John 1:9 But if we confess our sins to him, he is faithful and just to forgive us our sins and to cleanse us from all wickedness. (New Living Translation)
[2] 1 Corinthians 10:13 The temptations (trials) in you life are no different from what others experience. And God is faithful. He will not allow the temptation to be more than you can stand. When you are tempted, he will show you a way out so that you can endure. (New Living Translation)
[3] 2 Corinthians 5:17 This means that anyone who belongs to Christ has become a new person. The old life is gone; a new life has begun! (New Living Translation)

Thinking Outside The Box Inc.
Jon Dowat Attorney at Law
Phone: (630) 225-9840
Fax: (630) 836-8414

Posted: 8/19/2010