You could argue that the Bible incorporated the spirit of bankruptcy, well before the bankruptcy code was ever written. In fact, the Old Testament calls for periodic forgiveness of debt. Consider Deuteronomy 15:
‘At the end of every seven years you shall grant a remission of debts. And this is the manner of remission: every creditor shall release what he has loaned to his neighbor; he shall not exact it of his neighbor and his brother, because the Lord’s remission has been proclaimed.’
The Bible recognizes the inequity of keeping people forever locked in debt and instructs us to forgive debts for a fresh financial start every seven years. The Bankruptcy Code essentially codifies this principal by allowing for a discharge of debts via chapter 7 bankruptcy every eight years.
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The Bible Calls for Debt Forgiveness Every Eight Years
Consumers facing financial hardship are permitted, by federal law, to a fresh financial start every eight years. It seems too coincidental that Deuteronomy’s call for a forgiveness of debt every seven years is so closely mirrored by the Bankruptcy Code, it would appear that the Code was at least partially influenced by the Bible.
When is a Debt Actually Paid Back?
It is important to understand that the Bankruptcy Code has equitable underpinnings and ‘not paying back debt,’ because of a discharge, is not the whole story. The question becomes: do lenders who charge 30% interest want to be paid back? What constitutes paying back a debt? Presumably, paying back principal in full should suffice, however, it rarely does.
I would contend that a debt has been paid back when the principal amount borrowed has been repaid plus a reasonable interest rate. Many people who choose to file for bankruptcy have long since repaid their debts under the preceding definition, having paid years of minimum monthly interest payments that never dent the principal amount owed.
What Were Your Intentions When the Debt Was Incurred?
Borrowing money with no intention of paying it back is wrong, however, many consumers are victimized by predatory lending, and the Bankruptcy Code is all that stands in the way of permanent debt. Excessively high interest rates charged by payday lenders and credit card companies, put consumers in a trap that they rarely escape from.
Unfortunately, the trap is set deliberately, which is why as a bankruptcy attorney, I never have a moral problem filing cases for my clients. The vast majority of people I represent strive to pay back their debts and simply can’t. Help is available and there is nothing wrong with accepting it.