Christianity, Bankruptcy and Foreclosure

This is a timely post. Mainly because many Christians are finding themselves going through foreclosure and bankruptcy. Most of the people I talk to over this issue are deeply confused as to if it is right or wrong to exercise these options when in debt.

First and foremost, bankruptcy and foreclosure are NOT the same thing and cannot be used as parallel examples. The issues of foreclosure is not an issue of sin at all. When signing a contract for a house, the contract gives you two options. Pay the mortgage on time and receive the deed to your house after the agree upon payments are fulfilled or stop paying and forfeit the home to the bank and lose all your principle and mortgage payments. So principally, a Christian that stops paying on a house is just executing the foreclosure terms of the contract. They aren’t doing anything wrong at all. They are still living up to their promise. Put your mind at ease. Foreclosing on your home for any reason, even lack of equity is your right and you should NOT feel guilty for doing so. Of course there are consequences for foreclosing and you shouldn’t take the matter lightly either.

What about bankruptcy. I must admit this topic is a little harder to explain. First we must determine if it is indeed a sin – a moral crime against God – to claim bankruptcy. To determine a sin, an action must always be morally wrong for anyone in any given situation. Does bankruptcy meet this definition? I don’t think so. For instance, what if by no fault of your own, you are hit head on by a drunk driver. The drunk doesn’t have insurance and you spend 2 months in the hospital recovering? The hospital bills run you a half a million dollars and the hospital wants payment now. Is it wrong in this situation to claim bankruptcy? If you say “no” to this question then we are not dealing with a moral crime but a different category of action called “situational ethics”. Most things that may appear to be moral crimes against God actually better fit into this category. A situational ethic is exactly as it sounds. It may be right and may be wrong depending on the situation. A classic example of this is the question “Is it wrong to push an old lady?” On the surface, it seems like an easy answer, but what if the old lady was about to get hit by a bus? If the old lady was about to die and you pushing her saved her life, then it wouldn’t be wrong at all.. In fact, you would be a hero!

In many cases there are sin issues surrounding bankruptcy. Most commonly the issue is covetousness and idolatry. A love of money and a love for other people’s stuff. These sin issues need to be dealt with regardless of you claiming bankruptcy. The question is do you exercise the government’s use of grace and forgiveness of ones debt and pray that the person who needs the grace deals with the actual moral crimes of covetousness and idolatry, or do you continue to keep them in debt with no chance to learn for their mistakes. To me it seems like an easy answer. Get pastoral counsel in dealing with the sin issues and if absolutely necessary go with grace. It seems to me that bankruptcy is not and never has been the problem, so as leaders, we need to focus on the problem of idolatry, not bankruptcy. However, it is much easier for churches to legalisticlly focus on the symptom and ignore the disease. I had a pastor tell me once that he will never marry a Non-Christian couple that is living in sin. I said “why”. He said living in sin is against God’s law and he doesn’t want to condone it. I stated “It seems to me that marrying them would be the best way to get them out of sin!”. This pastor was focused on his principles so tightly that he didn’t see the big picture. The big picture with bankruptcy is that as elders and leaders of churches we are doing basically nothing to bring the gospel to peoples finances. We are feeding our flock with spiritual advice but ignoring practical advice in the mean time. People are feeling guilty with not living up to their responsibilities but have no problem buying that big screen TV they can’t afford. Debt is one of the most dangerous things we can do as Christians. Obviously Jesus thought so, he covered money problems more then most topics in the Bible. Why? Because money, though necessary for all, is also the best way to drive a wedge between God and His Children. More marriages end over finances then anything else. Financial issues are a leading cause of suicide and certainly most stress is from trying to keep up with the Jones’ than not. All of these are gospel issues. We need to start preaching the gospel to ourselves daily and when we do, bankruptcy will become a thing of the past. So the sin is not bankruptcy, the sin is not living for the gospel and until we do we will always be dealing with these situations.

One last thing. According to the New York Times from Sunday October 31st, 2010, 67.1% of all bankruptcies are medical related. So my example is not far fetched.


    • Kelly
    • November 22nd, 2010

    I just wanted to add that Leviticus teaches Jubilee, a celebration every 50 years where slaves were set free and debtors were released from their debts. It seems that our bankruptcy laws follow this concept. Sometimes in life, people will find themselves in financial trouble even though they’ve done the right things; it just takes one more hospital bill, loss of a few hours work at a job, or even outright loss of a job, for a person to find themselves in a possible bankruptcy situation. Through Jubilee even God recognizes the fact that in life things happen and there has to be a way to start over fresh, but just like with grace, it doesn’t give us a license to abuse it. In my opinion, for church leaders or pastors to heap more guilt on people in situations like this is just plain wrong.

      • Jason
      • January 4th, 2011

      If churches (leaders and attendees alike) would desire church discipline we could mitigate the financial issues of many. In the study on Sunday, I mentioned that to grow in wisdom one must desire reproof and welcome open and honest communications with church brothers/sisters. It should not be shocking that Christians sin, yet for many churches the concept of working through sin with others is unheard of (or at least not practiced). Imagine how many debt issues would be solved if we would seek the wisdom of others.

    • kathy diaz
    • February 23rd, 2011

    Thanks for expounding this topic. I struggled with this because having surrendered myself to the missions, I can not get off because of my house. I had been in financial hardship that had me in default of payment, tried to avail for programs to help me back, now trying to shortsale and was told that am in the brink of foreclosure. I left it all to God but had acknowledged prior to my surrender to missions my covetous heart…I am suffering the consequences of that, but my heart is right with God…but still I have to face the offshoot of my sins…pray for me for all am counting on is the graces and mercies of the Lord over this situation…it is hard to go through this but my hopes rest on the Lord…I just wonder if the Lord will use me still despite of this…but who am I but a worm that counts on Him…nonetheless, may the Lord be praised for He has been gracious and merciful still to me! If not for the peace…I might have done more grievous things because of this burden…

  1. Jason, sorry for responding to such an old post, but I’m enjoying reading all entries in your blog since discovering it.

    I would agree with your assessment on bankruptcy with this caveat: it is very true that many bankruptcies are triggered by some catastrophic event, such as a medical emergency. However, I would point out that few of us plan for emergencies at all…even though we should realize that emergencies do have the tendency to happen.

    No, I am not suggesting that someone is at fault for having a medical emergency; but I am saying that not planning for an emergency is foolish. Sure, there are some things that can happen that no one can possibly foresee, or even if foresee, they cannot possibly save enough to make it a financially affordable event. But not everything is in this category.

    Looking at the statistics, Americans are extremely poor savers–we often live paycheck to paycheck. And this occurs whether you’re earning minimum wage or six figures a year. We do not live below our means, and getting more money will not change that behavior.

    • I agree and at risk of turning this into a political commentary, I think that our government certainly does not make it easier to save as well. For instance, I started a business two years ago and have just enough money to support my household. At the end of the day, when I get penalized for being a business owner (self employment tax, extremely high insurance rates, and zero tax breaks for me because I don’t get a W2) savings is just about impossible. Of course I started the business to better my future so I am hopeful that it will change and I praise God that I have an income at all. In addition, the printing of money has sky-rocked the price of food and fuel leaving many Americans who were living below their means, now scraping to get by. My point is simply that though many bankruptcies are caused by stupidity, the bankruptcy is not the evil, its the intent of the person claiming it. We are called in the scriptures to be good stewards of the things God has given us and most (if not all) of us don’t do that very well, but God is not done sanctifying use yet so he will use even the bad situations to glorify Himself and better us.

    • greg
    • August 6th, 2015

    Great thoughts, Jason. Also, thanks to Kelly for noting the year of Jubilee in Scripture (but I think it sooner than 50 years?). Foreclosures, bankruptcy, and other financial woes can often be a means of God’s sanctifying process in us–just look at Job’s financial crisis in Job 1. And yet, those crises can been initiated through our bad decisions, others bad decisions, or recommended as good decisions in bad times (i.e., mortgages). Either way, I think you hit the nail on the head in regards to motivation both in what led to bankruptcy and foreclosure (or any other financial woe for that matter!). If all other attempts have been exhausted, then turn the home back over to the bank to the glory of God. And if the money runs out, seek a bankruptcy to the glory of God.

    Last thought, and I won’t spam any more: even in bankruptcy, we should consider offering restitution of some sort–especially if we used the goods without paying. This means paying what we can, as we can. Legally we are not obligated, but morally it would be helpful. Yes, we cannot give what we do not have, but we can give something back. (Even if I volunteer hours to work for a local merchant to whom I owed money. Or, pick up another part-time job to send money as I can.) Otherwise, turn the car in, return the product(s), and do your best to make it right for the wrongs (even unintentional wrongs) we would be committing against businesses. In God’s economy, the year of Jubilee would help prevent the perpetuation of debt and its incurring obligations so I don’t believe we are obligated to offer restitution. However, I do think it would be a wise way of showing that you wish you could pay back what you owe(d) in its entirety.

    Thoughts? Did I miss something?

    • I like what you’re saying here. Especially since you are careful not to make the desire of restitution a prescription. I believe that the problem with bankruptcy is in a lack of stewardship and this is a sinful action that must be covered by the gospel just like any other sin. One can certainly learn stewardship through restitution for certain however, the gospel is not about us doing things, but about what’s been done for us and no amount of poor actions by us will change that. However to the obedience of God, we must work out our salvation in fear and trembling and this points to us playing a roll in our sanctification and this sanctification may be helped through doing what you stated in your response.

      Lastly, Jubilee is the year after the 7th sabbath week. 7×7 = 49 + 1. So Jublee is every 50 years. (Leviticus 25). However, the passage start with how one is to work the land and I think that’s equally as important to this post. Man is to work the land for 6 years and then rest the land on the 7th year. In order to pull this off, the farmer must be a steward to the land and grow enough food in 6 years to supply his family food in the year of rest. If the farmer didn’t do this, he’d be in a world of hurt – kind of like bankruptcy.

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