By: Daniel Stone
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Is it immoral to file bankruptcy?
Most of my clients are very hesitant to file bankruptcy because they have been told since they were young that it is immoral not to pay your creditors back. While I admire this about my clients, I have to kindly tell them that historically, bankruptcy has always been an option. The Old Testament is one of the first historical manuscripts that refers to bankruptcy: “At the end of every seven years you shall grant a release of debts. And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the LORD’s release” (Deuteronomy 15:1-2).
When our nation was being formed in the late 1700s, the signers to the Constitution felt that it was important that individuals have rights to bankruptcy. It is no secret that the drafters used the Old Testament to come up with the idea that you can only file for bankruptcy once every seven years.
I also have to remind businessmen and women who come to see me that our country is dependant upon men and women that take business chances and risks. Our country would not survive if we did not have brave entrepreneurs starting businesses even though they know only a small percentage will be successful. This means that business people sometimes fail and often this failure leads to bankruptcy. That being said, most of our country’s successful business leaders have had huge failures, such as Donal Trump, before they became business success stories!
Finally, I tell my clients that in my opinion, bankruptcy is only immoral if you intend to resume the same mistakes that led you to filing bankruptcy. However, if you desire to learn more about financial education and turn away from a life off debt and slavery to creditors, bankruptcy can be an excellent moral choice 🙂