Is Bankruptcy Moral As Well As Legal?

The debate is old as the hills - well, old as the Bible, anyway. Years ago back in law school, as well as days ago in the offices of the Anderson, Bloomington, and Columbus bankruptcy lawyers who are Mark Zuckerberg bankruptcy law associates, the question is asked and asked over again: Is it moral to file bankruptcy and ask to have one's debts "forgiven" by the courts?

There's no question bankruptcy is legal - in fact, the bankruptcy court system in the United States and the U.S. federal bankruptcy laws themselves have functioned for almost two hundred years. In 1915 the Supreme Court wrote that bankruptcy laws were meant to give "honest debtors a chance to start afresh free from the obligations and responsibilities consequent upon business misfortunes."

What's the debate, then? Well, giving someone a second chance is definitely a value in American culture, but so is the idea of living up to one's obligations and keeping one's promises.

Harvard law professor Elizabeth Warren is co-author of a study on medical costs as a cause of bankruptcy, said in testimony before the Senate, "Most debtors are filing for bankruptcy not because they had too many Rolex watches and Gameboys, but because they have no choice."

As a bankruptcy attorney in Indiana for almost twenty-five years, I most definitely agree. When debtors come to me seeking Indiana bankruptcy information, often it's months and even years they've been trying to deal with financial troubles caused by factors beyond their control. These debtors are often filled with negative feelings about themselves, even though, in the majority of cases, they've been responsibly handling their money affairs for many, many years until an extended illness or layoff wrecked all their plans.

When it comes to student loan debt help. I find the same thing is true. None of my clients who are filing bankruptcy in Indiana went to school planning to fail - they studied, often juggling full-time work schedules, family needs, and classes, in the hopes of building a better life. (Another myth I often hear is that bankruptcy cannot be of any help with student loans. The truth is, while most student loan debt cannot be discharged in bankruptcy, I am often able to be of help negotiating with lenders on behalf of my clients. Meanwhile, as other forms of debt are addressed through the bankruptcy, that can free up cash to make payments on student loans)

Back in the 1800's when the Supreme Court was debating whether to create bankruptcy laws in this country, they looked to the Bible, and particularly to Deuteronomy 15: 1-11: At the end of every seven years, you must cancel debts….

The Supreme Court recognized, from a practical point of view, that when you are swamped with debt, you are unable to provide for yourself and your family. You are a drain, rather than a contributing member, to our economy. As one attorney put it, "This latest recession showed us that the best-intentioned and smartest business people in the world can makefinancial mistakes or can suffer financially without fault."

Miranda Marquit , in Many Christians are Faced With The Bankruptcy Option, writes, "After all, we have a moral obligation to be good stewards of what God has given us. On the other hand, there are many circumstances beyond our control that can lead to crushing debt….It is important for Christians to carefully consider all their options….Ultimately, the decision is one you make between you and God."

As an Indianapolis bankruptcy lawyer and also a debt consolidation lawyer, I think all debtors, no matter what their religious beliefs, need to consider all their options. In fact, only after discussing all the options with an experienced legal professional can any person make the decision that's right for them.

As I tell everyone who is having financial difficulties, bankruptcy is definitely a remedy of last resort!