Bankruptcy and the Bible. Yes, debt forgiveness is in there!

bible 3You may have heard it quoted.  It is written in the bible in the Old Testament.  I quote it here:  Deuteronomy 15:1-2, “At the end ofDeuteronomy 3 every seven years you shall grant a release.  And this is the manner of the release:  Every creditor shall release what he has lent to his neighbor.  He shall not exact it of his neighbor, his brother, because the Lord’s release has been proclaimed”.  Yes it is in the bible.  A “release” from your debts shall be granted every seven years by your creditors.

This verse therefore commands creditors to release people from the debts owed by debtors every seven years.  You could argue that the bankruptcy just enforces this biblical passage through the use of law.  You could easily argue that bankruptcy is indeed the very debt forgiveness talked about in this biblical passage.  (And I doubt the creditors will follow this biblical principle without bankruptcy law but you can try).

You could ask why is debt forgiveness in the bible.  Most of us in the debt relief business believe that it is in the bible because people knew in ancient times what we should all know now.  Debt is damaging to people, damaging, to society and damaging to the future of mankind.  It can’t be carried by people forever and it can’t be allowed to follow them and put them in debtor’s prison forever.

Debt slavery is extremely undesirable and indeed intolerable.  Debt must be released and people must be freed from it.  Ancient peoples knew that then and most of us who have lived with debt know that now.  And some would say that God commanded a seven-year debt forgiveness through this verse in case people forgot.  But it is clear that the bible sanctions debt release/forgiveness and it appears that it must be done on a regular seven-year basis.  It is hard to argue that this verse could mean anything else but that.

I believe that it is true that this forgiveness is necessary because people who are burdened with debt can’t spend, save, invest in homes or retirement and therefore can’t truly be productive members of society.  Sadly many of them check out and some even commit suicide because of debt.  Many of my clients have told me that they have considered suicide with all their debt prior to their consideration of bankruptcy.  Debt burdens are potentially the ruin of individuals and nations.  (see here for my article on my website on why you should file bankruptcy)

Bankruptcy is not the bad thing that many people believe it to be.  Many believe that it is irresponsible, somehow sleazy, underhanded, and in effect cheating.  Many believe that they must pay back their debts no matter how large they are and no matter how long it takes.

But then what is the purpose of your life?  To be a slave to your debt?  To spend you entire days on earth paying something to someone else that enriches them and impoverishes you?  With interest?  They knew better thousands of years ago.  I often believe that in modern times we make silly mistakes and have ridiculous beliefs that our ancestors would laugh at.

Bankruptcy is a liberator of people.  It frees them from debt and gives them a fresh start.

For all of our modern science and technology we still sometimes forget lessons they learned long ago,  One of them is that debt is bad.  It must have a limit in years.  It must be forgiven periodically.  This is good for everyone so let’s get on with it.

The next time someone disparages your thoughts of bankruptcy mention to them that it has been recommended for a very long time by some very trusted sources.  Enjoy your freedom and God bless!  Check out my blog about bankruptcy and Christianity here.

I am bankruptcy attorney in San Diego.  Please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com for more info. about any of these topics.  Or call my office for a free consultation at (619) 702-5015.  Call now for free credit report and analysis!  For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

Holy bible photo courtesy of Jemimus.  Deuteronomy photo courtesy of Billy Alexander.

Advertisements

“Occupy Chicago” wants to forgive student loans. Your student loan bailout should be through bankruptcy!

The “Occupy Wall Street” movement has created many spinoff movements all over the country like the one here in San Diego.  After hearing criticism for their lack of coherent demands, the “Occupy Chicago” chapter came out with a list of demands on Monday.  Among other things, like taxing the wealthy and attacking Wall Street, they want student loans forgiven.  I argued in a blog that I posted Sunday on the Occupy San Diego movement that student loans should be dischargeable in bankruptcy.

In the face of the bailouts that Wall Street firms and banks received more and more people are asking “where is our bailout”?  Regular people have a tremendous amount of debt which they cannot afford and they believe that justice demands that they need some consideration from government.  It is true that almost 50% of people pay no income taxes but should we bailout the 99% with massive wealth transfers?

I say no.   Most people in this country will not go for that.  I have argued for years on my blog that a bailout plan already exists for the 99% of us that are neither rich nor giant corporations.  It’s called bankruptcy and bankruptcy allows you to legally walk away from your debts and have them discharged so you no longer owe them.  You can then get a fresh start debt free and keep what money you earn from employment.  Everyone can avail themselves of bankruptcy.  You don’t have to be a privileged person or corporation to get it.  In fact if you make too much money you will be means tested out of a chapter 7.

So bankruptcy is available for regular people but there is a problem.  Student loans cannot be included in bankruptcy.  Student loans currently are not dischargeable in bankruptcy.   They do therefore indeed last forever or until you allege “undue hardship” which is very hard to prove.  If these student loans were to be included in the lists of debts that people could discharge in bankruptcy then regular people would not be saddled with them forever.  They could escape them and move on in life with their student loans forgiven.

This could be done so much more easily and fairly in the context of bankruptcy than through some government blanket forgiveness.  Bankruptcy has been around for hundreds of years and the systems are in place to handle forgiveness of debt through the filing of bankruptcy.  There are trustees and judges to oversee each individual to make sure that the people asking for forgiveness really can’t afford to pay these debts back because the have neither the income or assets to do so.

In bankruptcy there are even proscribed exemptions that allow each person to keep a certain amount of property.  For most of the 99% this would amount to people keeping all of their property because most people don’t have more than these allowed exemption amounts.

This solution will also be so much more palatable to the American public.  It allows the forgiveness of the student loan debt but within the confines of the bankruptcy system.  Each individual would have to file for bankruptcy to get his student loan debt forgiveness.  He would then be examined by a Trustee and he would face a judge if fraud or other problems came up.   His income and expenses would be looked at to determine that he could not pay his debts with his current income and thus he is formally bankrupt. Those who could afford to pay the loans would then have to do so in some form but many many student loan debtors would be able to escape these loans if they were dischargeable in bankruptcy.  Bankruptcy is no blanket gift.

And it would be fair.  Many people with student loans cannot afford to pay these loans and they have very little hope of paying them back.  They are under employed or more likely unemployed and they cannot afford their living expenses let alone these student loans that have not even landed them a job.  It is simply not fair that a person who used their credit cards to excess can discharge those debts but the person trying to get an education and a job can never escape them even if they have no money and no job.

But many people will say that if we make student loans dischargeable in bankruptcy then student loans will be harder to get.   Maybe that is a good thing and people won’t borrow money for degrees that won’t lead to a job.  But I also believe that as credit cards are still obtainable by most people today and they are dischargeable in bankruptcy.  Bankruptcy has not stopped that industry and dischargeable student loans will not stop lenders from lending money for these loans either.

It also should not matter whether the loans are government or private.  If  they are private then the loans should be treated like credit cards and if government loans are owed then forgiveness of these loans is only fair in light of the bailouts given by the government to the financial industry.  Whether government or private though the effect is the same on people.  They can’t afford to pay them back in many cases.  (Remember also that IRS tax debt is dischargeable after only 3 years and the IRS still continues to operate).

And for further fairness you could make student loans dischargeable after a period of time say 10 or even 20 years.  If the student has not paid them back by that time then they are certainly having a problem and they probably can’t pay them back.  It is only fair to allow people to escape them in time.

I am a bankruptcy attorney practicing bankruptcy law in San Diego, CA.   For further information please visit my website at www.farquharlaw.com or www.freshsatartsandiego.com.   Or call my office for a free consultation at (619) 702-5015.  If you or someone you know are considering bankruptcy then get my Free e-book “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPCTY FILING” by e-mailing me at farquharesq@yahoo.com.