the
S tewpot
A potpourri of practical
Note to readers: In this issue we are omitting the page 4 “Indisputable
ideas to help you become a
Principles of a Committed Steward” – this segment will resume in November.
better steward
October 2005
Once the debtor has presented their case in an open and honest Volume 10, Issue #10
way to his, her, or their creditors, the creditors have two alternatives
— they can agree to allow the borrower to pay what they are able on a
BANKRUPTCY!
regular monthly basis until the debt is settled, or they can force the
individual into involuntary bankruptcy (an option of the creditor) and
Last Resort, or First, for a Christian?
settle for whatever the debtor’s assets are worth. In the majority of
cases the creditor will choose the first alternative as they are not in the
business of losing money, even if they have to wait for the final settle- by Gordon Botting
ment over an extended period of time. Sometimes a creditor will
reduce or even eliminate the interest to help the debtor pay off his debt Business guru Donald Trump has done it, film
in a timely manner. One of the key factors for the creditor is if they stars Burt Reynolds and Kim Basinger have done
perceive that an individual or family is not only committed to paying it, and so have millions of other Americans. “What
off the current debt but also to not acquiring any more debt. is it they have done?” you may ask. The answer is:
Final Thoughts on Bankruptcy Filed for Bankruptcy.
Unfortunately both sides lose in bankruptcy. Creditors are Between 1990 and 2002 the number of
deprived of the money that is rightfully theirs and debtors lose not bankruptcies in the United States doubled and
only the ability to borrow legitimately on other assets for a number of since then has remained at 1.5 million annually. This year the number
years, but more importantly, they lose their self-esteem and respect. is sure to increase as many financially troubled Americans rush to beat
Furthermore, Christian men and women are obligated to repay every the October 17 date when the new bankruptcy law changes signed by
penny even if it means living “on porridge and bread.” 4 President Bush on April 20 of this year go into effect.
Finally, look to the God of financial miracles who may surprise Chances are that you or someone you know has declared
you with a means of repayment. “Call on me in the time of trouble. I bankruptcy and has seen first hand the difficulties of this financial
will deliver you, and you will bring honor to my name” (Psalm 50:15 situation. This issue of the “Stewpot” will attempt to answer some
TCW). of the questions relating to this subject.
References:
1 What is Bankruptcy?
U.S. Courts, http://www.uscourts.gov/bankruptcycourts.html
2
“Too-easy Bankruptcy Laws Give Abusers a Free Ride,” Editorial, USA Today, “The primary purposes of the law of bankruptcy are: (1) to give an
David Mazzarella, Editor, October 4, 1996 honest debtor a ‘fresh start’ in life by relieving the debtor of most
3
Larry Burkett, “Should Christians Declare Bankruptcy?” Moody Magazine, debts, and (2) to repay creditors in an orderly manner to the extent that
October 1982 the debtor has property available for payment.” 1
4
Letter 4, 1877, Ellen G. White
5
“Bankruptcy,” Crown Financial Ministries, October 25, 2004, http://www.crown.org/
Library/ViewArticle.aspx?ArticleId=113&FullMode=true “Bankruptcies in the USA are over eight times higher
Other reference: http://www.uscourts.gov/library/bankbasic.pdf than in the Great Depression — 1 per 100 households.” 2
Distributed by: Upper Columbia Conference Stewardship Ministries. Director: Doug
Johnson. Produced by: Pacific Union Conference Stewardship Department. Director:
Gordon Botting. Design/Assistant Editor: Carol Lowe. Stewardship is a total life-style. It involves our health, time,
Page 4
talents, environment, relationships, spirituality and finances.
Bankruptcy is governed by the “Bankruptcy Code” which was Are There Legitimate Reasons for
enacted by Congress in 1978 and has been amended several times. It is Bankruptcy?
the uniform federal law that governs all bankruptcy cases.
There are some legitimate reasons for a Christian individual or
Following are three of the five basic types of bankruptcy: family to seek protection under federal bankruptcy laws.
Chapter 13 allows an individual to restructure their debts and These might include loss of employ-
repay creditors over time. ment due to unforeseen layoff, an
Chapter 7 allows the discharge of certain debts (i.e., set free unexpected major illness, or a difficult
from). There are exceptions, however, such as the IRS, school divorce. However, a few years ago it
loans, etc. was reported that only 15% declared bankruptcy due
to job problems, 17% for health reasons, and 12%
Chapter 11 is primarily designed for the reorganization of for divorce; interestingly, the number one reason
commercial enterprises. for declaring bankruptcy was that people had “overextended”
Can Anyone File Bankruptcy? themselves.2
In the United States only an individual or corporation having a Having presented some legitimate reasons for declaring
place of business or property in the United States can become a bankruptcy, there is the issue of motivation to be considered. Is the
bankruptcy action being taken to protect the legitimate rights of the
bankruptcy debtor. Chapter 13 is only available to those persons with
creditors, or are the assets of the debtor being purposefully withheld
unsecured debts of less than $250,000 and secured debts less than from the lenders or creditors? Some individuals will transfer their as-
$750,000. Chapter 7, on the other hand, is available to any individual sets to other members of their family or to corporations in an effort to
and to the majority of businesses. Chapter 11 is available to both deceive creditors. The Bible says, “Don’t hold back from doing good
individuals and corporations, the exceptions being stock or commodity when it is in your power to do so. Don’t tell those who come to you
brokers. for help [or for their money], ‘Not right now, but another time,’ just
Should Christians Declare Bankruptcy? because it is inconvenient for you” (Proverbs 3:27-28 TCW).
This is not an easy question to answer. First, we should be Is Bankruptcy the Only Option?
reminded that Scripture is clear about our responsibilities in money Some years ago Larry Burkett, the late
matters. When we fail to repay our debts, God aligns us with the un- president of Crown, a Christian financial
righteous. “The wicked borrow money with no intention of paying it organization, wrote the following paragraph that is
back but the righteous pay back what they borrow with interest” still applicable today: “As a financial counselor
(Psalm 37:21 TCW). helping struggling families, I’ve never found bankruptcy to be a
Second, loans are simply promises to creditors that we will repay, ‘necessary’ alternative. Instead, we’ve always found a way to work
over a period of time, something that we bought with their money: a out a repayment plan, provided the borrowers are willing to give up
home, vehicle, furniture, etc. God’s Word reminds us, “He’s not their ‘rights’ and accept their responsibilities. The procedure for
pleased with (His) people who make foolish promises . . . It’s better averting a bankruptcy is simple — don’t withhold anything from the
not to make a promise than to make a promise and not keep it” (Eccl. creditors, and reveal the whole truth.” 3
5:4-5 TCW). “Be careful not to let your emotions lead you into mak-
ing rash promises you can’t keep” (Eccl. 5:6 TCW).
“Although our nation’s legal system may discharge
Third, in the majority of cases declared by an individual or family,
the declaration of bankruptcy is only a symptom of the real problem, debts through a bankruptcy process, God’s people
which is that of violating both God’s principles and accepted human should still repay their debts in full, even after a
laws of financial management. bankruptcy.” 5
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