The term bankruptcy comes from two Latin words and literally means “broken bench.” Under Roman law, creditors divided up the assets of a delinquent debtor, then broke the debtor’s workbench as punishment and a warning to other indebted tradesmen.

Today’s laws and changes in consumer attitude toward bankruptcy have fostered a climate in which people regard bankruptcy as a more plausible remedy for financial problems than they once did. And statistics that show marked increases in the number of personal bankruptcies seem to support this.

Biblical principles regarding bankruptcy:

* A debtor makes a commitment to pay back whatever he or she has borrowed, regardless of circumstances or how long it takes. “The wicked borrows and does not pay back, but the righteous is gracious and gives”(Psalm 37:21).

* God’s Word is clear; a debtor is obligated to repay what has been borrowed. “It is better that you should not vow than that you should vow and not pay” (Ecclesiastes 5:5).

* Bankruptcy should be a last alternative, not the first option. Debtors first need to try to work with creditors and be willing to make whatever sacrifices necessary to fulfill their promise to repay.

* Scripturally, bankruptcy does not negate an agreement to repay money you have borrowed. This doesn’t mean that a debtor in a hopeless situation cannot file bankruptcy. However, other options should be tried first, such as selling major assets, liquidating retirement funds, taking on additional jobs, and working with a credit counseling service.

* If all options have been exhausted and there is still a need to file bankruptcy, a debtor must commit to two things before filing.

1. A debtor must be willing to accept the absolute requirement to live on a conservative budget and pay the debts back. In some cases, this may take an entire lifetime.

2. The debtor’s motive must be honorable. If bankruptcy action is taken to protect the legitimate rights of the creditors, the action is biblically acceptable. But if the motive is to protect the assets of the debtor, without due consideration of the creditors, the action is unscriptural. “Do not withhold good from those to whom it is due, when it is in your power to do it. Do not say to your neighbor, ‘Go, and come back, and tomorrow I will give it,’ when you have it with you” (Proverbs 3:27-28).

God’s Word makes it clear that a vow (promise) of any kind is not to be taken lightly. Once you have given your word, it becomes a binding contract, so carefully consider the consequences before you agree to terms.

In today’s world this concept is rarely taught and seldom applied. A vow to pay a creditor is usually seen as something made under one set of circumstances and broken under another. However, God’s Word says that debtors are to be held accountable.

Our legal system may discharge debt through bankruptcy, but God’s people should repay their debts in full, even after a bankruptcy. This can be a powerful witness to a world that is cynical about Christianity making any practical difference in a person’s life. Believers are held to a higher standard than merely what is legal.