In the last blog, I briefly described how our concept of bankruptcy comes from the Old Testament. Unmanageable debt is not a life sentence. Compassion, redemption, and a “fresh start” are biblical concepts.
The flip side of the idea that debts and debtors may deserve forgiveness is the fact that abusive creditor practices are blameworthy. A substantial number of bankruptcies could be avoided if lenders charged more reasonable rates of interest. The practices of the credit card industry have been obnoxious. Credit card lenders have engaged in “gotcha” tactics of bait and switch teaser rates, and jacking up interest rates to over 30% per year when borrowers are barely a day late. “Late charges” are a multi-billion dollar revenue source for the banking industry.
Judeo-Christian scripture takes a very dim view of excessive interest rates and prohibits “usury.” Charging interest for loans of money or food to a needy brother or sister or a resident alien is prohibited (Exodus 22:25; Leviticus 25:35). Deuteronomy 23:19-20 forbids taking interest from any member of the community. Charging interest for loans, especially to the poor, is consistently condemned (Ezekial 22:12; Nehemiah 5:1-11).
Self-righteous collection agents for banks often go out of their way to make distressed debtors feel terrible about themselves and their situations. Oftentimes, it’s the banks themselves who create the problems causing non-payment of debts. Our usury laws and U.S. Supreme Court decisions allow banks to get away with extremely abusive practices, which the Bible itself prohibits.
The point is, if you or someone you care about is a distressed debtor, that person should not be made to feel like they’re evil or unworthy. If the banks were more reasonable, many bankruptcies could be avoided.
Let’s close with a tip for the honest but unfortunate debtor. Sometimes, when a person is facing bankruptcy, they will repay friends or family before filing, sensing that this is the right thing to do. Big mistake! Under certain circumstances, the Bankruptcy Court can force the recipient of such repayment to disgorge the money and pay it back to the court. This is called a “preferential transfer;” the law does not allow certain creditors to be repaid on the eve of bankruptcy (which can go back one year for family repayments) when other creditors are having their debts discharged. Words to the wise: get good advice.
If you are in need of a bankruptcy attorney, call us today for a free consultation!