Is it ethical to file for bankruptcy? What does the Bible have to say about debt forgiveness?
The answer to the ethical concerns surrounding bankruptcy and debt forgiveness is likely to be found in our faith for the religious among us. Indeed, the Bible mentions loan and debt forgiveness multiple times, but nowhere more specifically than in Deuteronomy 15:
At the end of every seven years, you must award debt forgiveness. And this is how the release is done: Every creditor who has lent something to a neighbor must release it; he must not demand it from his neighbor or brother because it is termed the Lord’s release.
The Bible calls for debt remission every seven years in the book of Deuteronomy. Individuals are allowed to discharge debts in chapter 7 bankruptcy every eight years, perhaps not coincidentally. As a result, it appears that the Bible’s debt forgiveness principles are reflected in the Bankruptcy Code to some extent. Although there aren’t enough parallels between the Book of Deuteronomy and the Bankruptcy Code to demonstrate an Establishment Clause violation, the essential notion is the same: debt relief once per decade or so is equitable and right.
The takeaway appears to be that debt forgiveness should not be handled lightly, but that no one should live their entire life in debt. When you’ve exhausted your choices, it’s fine to seek assistance.
What does the Bible say about paying your debts?
You will be enslaved to your past mistakes until you are debt-free. You can move forward in God’s grace, but the repercussions of your acts will follow you until your debts are completely paid off.
Is debt a sin according to the Bible?
“For the love of money is the source of all evil. Some people have drifted from the faith and pierced themselves with numerous griefs because they are greedy for money.” 1 Timothy 6:10 New International Version
Is money inevitably a bad thing? Money, on the other hand, is a tool. The Bible expressly states that the “Money “love” is a bad thing. Our relationship with money is harmful if we place money above God in any way. We all know that money may be put to good use and can be a gift in a variety of ways. When money is given to a family in need, it may be the difference between that family making it through a difficult time or season in their lives. Money can also be used to support gambling or other addictions. Money and our occupations can become idols, driving us to prioritize money and our jobs over our families, ourselves, and even God.
So, what about debt? Is debt a bad thing? We’ve all heard of Proverbs 22:7, which says, “The wealthy rule over the poor, and the borrower is the lender’s slave.” Is this implying that debt is a negative thing? It could be, but I haven’t seen a text in the Bible that says you shouldn’t utilize or have debt as a Christian. In truth, the Bible never says you shouldn’t borrow money. It does emphasize, however, that considerable caution should be used when doing so. Debt is similar to money in that it can be utilized for both good and harmful purposes.
First and foremost, it is critical to comprehend the various forms of debts. There is oppressive or damaging debt, which can take the form of a variety of consumer loans. Credit cards, vehicle loans, and school loans are the most common examples. The majority of these loans have exorbitant interest rates. Even though some car loans or student loans may have lower interest rates, their ease of access encourages you to borrow far more than you need, which is why they are included in this group.
However, there is another form of debt that we rarely examine from a biblical standpoint. This is the same debt that churches use to create new buildings and campuses, as well as debt that corporations use to expand their operations. When buying a new rental property, real estate investors frequently employ it. It’s sometimes referred to as the “Debt that is “good,” “wealth creation debt,” or “constructive debt.” This debt has a lower interest rate and is invested in something that has the potential to grow in value faster than the interest rate charged. For instance, borrowing money at 4% and investing it in something with a 7% return, or borrowing money from a bank to buy a rental property where the rental revenue more than covers the mortgage payment. The borrower can grow his or her fortune by doing so.
This is also true “Is “good” debt “bad” debt? That, I feel, is dependent on how it is used and what our true connection with money is. “No one can serve two masters,” Matthew 6:24 reads. You’ll either dislike one and adore the other, or you’ll be committed to one and despise the other. You can’t serve God and money at the same time.” So, how much does your relationship cost? I feel it is terrible, whether you are wealthy or poor, to be so in debt that it consumes you. I also feel that pursuing worldly riches because you are obsessed with the idea of becoming wealthy or wealthier is incorrect. Even yet, “Good” debt can be misused, resulting in bad repercussions, and must be carefully controlled.
As Christians, we should be putting away treasures in heaven rather than being preoccupied with our earthly possessions “Wealth” is a term used in this world. I believe it is acceptable to use money as a tool for good and to spread God’s Kingdom if we are right with God and our relationship with money is one of mutual respect “debt that is “good/constructive” for the purpose of accumulating more wealth
I’ve paid off all of my consumer and oppressive debt, but I still use it on a monthly basis “To build wealth through real estate investments and my business, I took on “good” debt. This has enabled me to improve my personal net worth and income, allowing me to increase my tithe and donating and thereby bless even more people.
The truth is that many Christians are currently so preoccupied with paying off their debts (both bad and good debt) that they are squandering productive years and will not be able to retire.
Instead, they will have to accept a substantially reduced standard of living in retirement or risk running out of money.
Many people in this circumstance are forced to choose between selling their home and downsizing or taking out a reverse mortgage (adding to their debt) in order to survive in retirement. When people find themselves in this circumstance, their ability to give and be a benefit to others is obviously severely diminished.
Is it therefore a sin to be in debt? I am a Christian and a CFP® professional, but I am not a biblical scholar. But, as far as I can understand, being in debt is not considered a sin. It is something that should be carefully considered in both your heart and your whole financial plan. As I teach in Phase I, the Foundation Phase, I believe you must pay off all consumer and oppressive debt before moving on to Phase II and beginning to truly Accumulate Wealth. Once you’ve reached Phase II, I believe you should assess your unique situation, assess the health of your financial connection, and consult with your advisors to see whether utilizing “It’s possible that a “good” debt will benefit you, allowing you to be even more blessed and help others.
What did Jesus say about forgiving debt?
Cyprian:After the provision of food, pardon of sin is requested, so that he who is fed by God may live in God, and not only the present and passing life, but also the eternal; whereunto we may come, if we receive the pardon of our sins, to which the Lord gives the name of debts, as he continues, I forgave thee all that debt, because thou desiredst me. (Matthew 18:32) How well is it for our need, how provident and saving a thing, to be reminded that we are sinners compelled to make petition for our transgressions, so that in demanding God’s indulgence, the mind is brought back to a consciousness of our guilt? To ensure that no one can deceive himself into thinking he is innocent and perish even more wretchedly as a result of self-exaltation, he is told that he commits sin every day and is taught to pray for his sins.
Augustine:With this sword, the Pelagian heretics received their deathblow, who dare to assert that a good man is free entirely from sin in this life, and that a Church, without blemish or wrinkle, is made up of such righteous men at this time.
Both the norms of the Church and the opening of the prayer, which tells us to call God Father, demonstrate that this prayer is meant for the faithful. By requesting that the faithful pray for sin forgiveness, He demonstrates that sin can be forgiven even after baptism.
Cyprian:He, who taught us to pray for our sins, has promised us His fatherly mercy and forgiveness. But He has also added a law that binds us under the set condition and obligation of asking for our crimes to be forgiven in the same way that we forgive those who owe us money.
Gregory the Great: Whatever good we desire of God in penitence, we should first bestow on our neighbor.
Augustine:This is not said simply of money debts, but of all things in which anyone sins against us, including money, because he sins against you if he does not repay money owed to you when he has the means to do so. You can’t say, “Forgive us our debts, as we forgive our debtors,” unless you forgive this sin.
Pseudo-Chrysostom: With what hope, then, does one pray who harbors a grudge against someone who has injured him? When he prays with a lie on his lips, when he says, “I forgive,” but does not forgive, he seeks God for forgiveness, but he does not receive it. Many people will not use this prayer because they are unwilling to forgive those who have wronged them. What a fool! First, because anyone who does not pray as Christ taught is not a disciple of Christ; and second, because the Father does not readily hear any prayer that the Son has not dictated; for the Father knows the Son’s intention and words, and will not entertain such petitions as human presumption has suggested, but only those that Christ’s wisdom has laid out.
Augustine:Forasmuch as this great goodness, namely, to forgive debts and to love our enemies, cannot be possessed by such a large number as we suppose to be heard in the use of this prayer; without doubt the terms of this stipulation are fulfilled, even if one has not attained to such proficiency as to love his enemy; yet if when he is asked to forgive one who has trespassed against him, he does forgive him from his heart; for he And if one has been moved by a sense of sin to seek forgiveness from the one against whom he has sinned, he is no longer to be looked of as an adversary, and loving him is no longer as difficult as it was when they were actively at odds.
What did Jesus say about finances?
Our money, Jesus remarked, is a test. If you read Luke 16:11, you’ll see that Christ has no reason to trust you with true riches if you can’t manage worldly prosperity. You may see the Parable of the Talents in black and white if you go to the website.
If I don’t go to church, should I still donate 10% of my income?
Giving 10% of your income to anything other than your local church isn’t truly a tithe—just it’s a lovely donation, if we’re being technical. That, however, is never a negative thing! Even if you aren’t a member of a local church, there are other ministries and organizations that could benefit from your contributions.
Should I tithe while trying to pay off debt?
Tithing should be a priority even if you’re in debt or going through a difficult financial period. Yes, you read that correctly. While it may be tempting to use that money to pay off debt, the discipline and faith that tithing provides is well worth it. Even if you’re paying off debt, you can maintain a kind mindset.
If you believe it will take a miracle to get through the month with 10% less money in your wallet, you may need to examine your lifestyle. Take a look at your budget and see where you can save money. It may entail restricting some of your leisure spending, taking your lunch instead of eating out every day, boiling your own coffee, or purchasing generic products, but it is doable!
However, while you’re paying off debt, you should hold off on making offerings (additional donations). If you’re in debt, you should use all of your excess cash to pay down your debt. When you’re debt-free, you’ll be able to give as much as you desire!
Do I give 10% of my income before or after taxes? And do I add income from side hustles?
To be honest, it’s entirely up to you whether you tithe from your gross or take-home earnings. The concept is that you’re donating 10% of your earnings. Dave Ramsey gives from his pre-tax income, but he’ll be the first to advise you, “Just give and be a giver.” It’s all about adjusting your mindset.”
When it comes to your side hustle, the 10% you provide should be taken from your overall income. So, if you have a $300 extra monthly income from a weekend part-time work, add it to your total monthly income and tithe $30 of it.
What Bible says about financial breakthrough?
“And if you are untrustworthy with worldly wealth, who will trust you with the true treasures of heaven?” says Luke 16:11. Before a breakthrough, money must always be put to good use. Being a good steward allows you to see the benefits of your devotion and profit from them not only now, but in the future.
How does debt cancellation work?
You have a debt if you borrow money and are legally required to repay a definite or determinable sum at a later period. You could be personally liable for a debt or possess property that is encumbered by one.
Your debt is considered canceled in the amount that you don’t have to pay if it is forgiven or discharged for less than the entire amount you owe. However, there are a few exceptions to the rule, in which the amount you don’t have to pay isn’t considered canceled debt. These exceptions will be covered in greater detail later. A debt may be cancelled if the creditor is unable to collect, or has given up trying to collect, the amount you owe. A foreclosure, repossession, voluntary transfer of the property to the lender, abandonment of the property, or a mortgage modification may result in the debt being cancelled if you own property subject to a debt.
In general, if you have cancellation of debt income because your debt is canceled, forgiven, or discharged for less than the amount you owe, the canceled debt is taxable, and you must record it on your tax return for the year it occurred. If the law specifically enables you to deduct it from gross income, the canceled debt isn’t taxed. These exclusions will be explained in more detail later.
After a debt is canceled, the creditor may give you a Form 1099-C, Cancellation of Debt, which includes information such as the amount of the debt cancellation and the date of cancellation. If the information on your Form 1099-C is erroneous, contact the creditor to get it corrected. For example, if the creditor is still attempting to collect the debt after mailing you a Form 1099-C, the debt may not have been canceled, and you may not have income from a canceled debt. You should confirm your individual situation with the creditor. Whether or not you receive a valid Form 1099-C, it is still your duty to declare the taxable amount of canceled debt as income on your tax return for the year in which the cancellation occurs.
If the debt is a nonbusiness debt, you must report any taxable amount as ordinary income from the cancellation of the debt on Form 1040, U.S. Individual Income Tax Return, Form 1040-SR, U.S. Tax Return for Seniors, or Form 1040-NR, U.S. Nonresident Alien Income Tax Return as “other income” on Form 1040, U.S. Individual Income Tax Return, or Form 1040-NR, U.S. Nonresident Alien Income Tax Return, or Canceled Debts, Foreclosures, Repossessions, and Abandonments, Publication 4681 (for Individuals).
Caution: If you have property that secured your obligation and the creditor takes it in full or partial payment of your debt, you are considered to have sold it to the creditor. If you were personally liable for the debt (recourse debt) or not personally liable for the debt (non-recourse debt), your tax treatment will differ (nonrecourse debt).
The amount realized if your property was subject to a recourse debt is the property’s fair market value (FMV). The amount of the debt in excess of the FMV of the property that the lender forgives is your usual income from the debt cancellation. Unless you meet one of the exceptions or exclusions listed below, you must include the debt cancellation in your income. Gain or loss on the sale of the property will be the difference between the FMV and your adjusted basis (typically your cost).
If your property was subject to a nonrecourse loan, the total amount realized is the nonrecourse debt plus any cash and the FMV of any property you received. You will not receive regular income as a result of debt discharge.
The examples below demonstrate the distinction between recourse and nonrecourse debt.
- You paid $2,000 down and signed a $18,000 recourse note on a $20,000 boat for business use. You are no longer able to make payments on the note after paying down $4,000 on it. The boat was repossessed by the boat dealer, and it is now worth $11,000. You will receive $3,000 in regular income from the debt cancellation ($14,000 outstanding debt owed less $11,000 FMV of boat). The difference between the boat’s FMV of $11,000 (the amount you realized on repossession) and $20,000 will result in a $9,000 loss on disposition (your adjusted basis in the boat).
- The only difference is that when you bought the yacht, you signed a nonrecourse note. When the dealer repossesses the boat, you will lose $6,000, which is the difference between the $14,000 realized (the face amount of the remaining debt) and the $20,000 you paid for it (your adjusted basis in the boat). You have no regular income as a result of the debt elimination.
For further information on canceled debt and reporting gain or loss from repossession, foreclosure, or abandonment of property, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals). Publication 544, Asset Sales and Other Dispositions, and Publication 523, Selling Your Home, are also helpful.
Amounts that meet the criteria for any of the following exceptions are not considered debt cancellation income.
Deuteronomy 15:10 (NIV)
“Give generously to them and do so without grumbling in your heart, and the LORD your God will bless you in all your labor and in everything you do.”
Isaiah 58:10 (NIV)
“And if you devote yourself on behalf of the hungry and the oppressed, your light will rise in the darkness, and your night will become like the noonday.”
Luke 14:13-14 (NIV)
“However, invite the poor, the crippled, the lame, and the blind to your dinner, and you will be blessed.” You will be reimbursed at the resurrection of the righteous, even if they are unable to repay you.”
Corinthians 9:6-7 (NIV)
“Keep in mind that whoever sows sparingly reaps sparingly, and whoever sows freely reaps generously.” God loves a cheerful giver, so each of you should give what you have determined in your heart to offer, not unwillingly or under duress.”
Pray
Help us, Lord Jesus, to follow you to the outside of society, where people are lonely, suffering, and in desperate need. Let us give freely in gratitude for everything you’ve done for us for free.
What does the Bible say about payment?
The biblical mandate, on the other hand, is to prioritize caring for individuals in your sphere of influence. Don’t underpay people to the point where they have to rely on government assistance. “Do not withhold good from those who are due it while it is in your power to act,” says Proverbs 3:27.
Is borrowing a sin?
Usury—charging interest at whatever rate—is a sin condemned by the eighth commandment, according to the Westminster Confession of Faith, which is upheld by the Reformed Churches.
Concerns about usury included the Rothschild loans to the Holy See in the 19th century and the zinskauf clause abuse in the 16th century. This was troublesome since charging interest (albeit not all interest – see Fifth Lateran Council above) might be claimed to be a violation of teaching at the time, such as that represented in the papal Vix pervenit of 1745. Workarounds were sometimes used to avoid any charges of doctrinal violation. The Medici Bank, for example, gave money to the Vatican in the 15th century, which was late in repaying the loan. “The Medici overcharged the pope on the silks and brocades, the diamonds, and other things they supplied,” rather than charging interest. The 1917 Code of Canon Law, on the other hand, reversed the position and allowed interest to be earned on church funds.
The Catholic Church has always denounced usury, but with the emergence of capitalism in contemporary times, earlier assumptions about the nature of money have been called into question, and the Church has had to revise her understanding of what constitutes usury to accommodate the new reality. Thus, the Church points to the fact that Mosaic Law does not prohibit all interest-taking (demonstrating that interest-taking is not an inherently sinful act, similar to homicide), as well as the popularity of interest-paying bonds and loans. As a result, “because possession of an object is generally useful, I may claim the price of that general utility, even though the object is of no benefit to me,” as the old Catholic Encyclopedia expressed it.
In a paper published around the turn of the twentieth century, Jesuit scholar Joseph Rickaby described the evolution of the economy in connection to usury as follows:
Commerce developed quickly in major towns, and was well on its way to maturity five centuries ago. The elements that make interest legal and distinguish it from usury were then easily obtained. Those centers, however, were isolated. (…) You might have a magnificent metropolis, such as Hamburg or Genoa, that was an early kind of commercial business, and society was in its infancy fifty miles inland, and the great city was as if it belonged to another world. As a result, the identical transaction, as specified by the wording of the law, could represent legal interest in the city and usury in the country, due to the disparity between the two.
In such a circumstance, the legislator must choose between prohibiting interest in one place and permitting usury in another; between limiting speculation and enabling oppressive licensing in another. The medieval legislator opted for the first option. Together, the Church and the State enacted a number of laws to limit the taking of interest, regulations that, like infantile clothing, should not be dismissed as silly limits simply because they are no longer applicable and would not fit the modern progress of nations. The State has since repealed those laws, and the Church has formally said that she would no longer enforce them. Still, she holds dogmatically to the belief that there is such a thing as usury, and that it is defined in the Fifth Council of Lateran.
What the Bible says about financial problems?
We’d like to introduce you to an old-fashioned term: stewardship. It basically indicates that you’ve been entrusted with looking after someone else’s property. Because you have someone to answer to, managing a group of people or resources at work is an example of stewardship.
Is it clear where we’re going with this? You are, indeed, a steward of the money and resources that God has entrusted to you. Of course, you must now assume personal responsibility and work diligently. Indeed, because God has entrusted you with a task, you must treat it with seriousness! But, at the end of the day, God gives you the power to make money and accumulate wealth, as we can see in this verse:
You can think to yourself, “This money has been created for me by my power and the strength of my hands.” But keep the Lord your God in mind, because it is he who provides you the power to produce prosperity. 8:17–18 (Deuteronomy) (NIV)
Because God is the true owner of everything under the sun, you can trust Him with the money He’s given you! He is the sole source of our safety. You should not put your reliance in money, as 1 Timothy 6:17 (NIV) advises, but rather in God “Have faith in God, who abundantly provides for our happiness.”
