Debt Cancellation in Deuteronomy 15 and Modern Bankruptcy: A Biblical Perspective on Financial Fresh Starts

Introduction

Let’s talk about it…There is said to be a “social stigma” around bankruptcy, but is that a reason not to file? Businesses and individuals file for financial resets. However, there was a time, and could still be, when the church frowned upon the body of Christ filing bankruptcy. Bankruptcy laws are for the just and the unjust and a right of a citizen of a country.

The Year of Release in Deuteronomy 15:1-11

In Deuteronomy 15:1-11, Moses instructs the Israelites to cancel debts every seven years, known as the “Sabbath Year” or “Year of Release.” This debt forgiveness applied specifically to debts between fellow Israelites, ensuring that community members were not trapped by unpayable financial burdens indefinitely. This principle reflects a social responsibility to prevent extreme economic inequality and reminds us that God values people’s freedom and dignity over accumulating wealth.

The Year of Release was about more than just money. It was an act of faith, requiring trust that God would provide for all—even if creditors didn’t receive what they were owed. It also created an economic reset, preventing generational debt and encouraging a community-oriented society where wealth was shared rather than hoarded. At its heart, it expressed God’s compassion, justice, and vision for a society rooted in mutual support.

Modern Bankruptcy: A Financial Fresh Start

Today’s concept of bankruptcy serves a similar purpose to the Year of Release by providing relief from overwhelming debt, though it operates differently. Bankruptcy laws vary by country, but in the United States, individuals can file for Chapter 7 or Chapter 13 bankruptcy, depending on their situation. Chapter 7 bankruptcy wipes out most unsecured debts, while Chapter 13 creates a repayment plan that reorganizes debt over time. Bankruptcy does not erase all financial obligations (such as certain taxes and student loans), but it aims to relieve people of insurmountable debt and enable them to start afresh.

Unlike the Year of Release, bankruptcy is not a cyclical or community-wide practice but an individual recourse that often comes with consequences, including a hit to one’s credit score. It is available as a last resort, requiring debtors to prove their inability to repay. While bankruptcy laws provide relief, they also involve court proceedings, asset liquidation, and, in many cases, financial counseling.

Let’s Compare Deuteronomy’s Debt Release with Modern Bankruptcy

1. Frequency and Community Impact
   In ancient Israel, the Year of Release was community-wide and occurred every seven years. This meant that debt forgiveness was built into the social and economic structure, benefiting everyone equally regardless of individual circumstances. Modern bankruptcy, by contrast, is an individual choice triggered by financial crisis and is available at any time but not guaranteed to everyone.
2. Spiritual and Social Responsibility
   The Year of Release was deeply spiritual, seen as an act of obedience to God and an expression of mercy toward others. Debt cancellation was not merely a financial policy but a social commitment that reflected God’s love and fairness. While providing relief, bankruptcy laws, are primarily legal mechanisms aimed at individual financial ability to pay one’s debts rather than social or spiritual renewal.
3. Consequences and Conditions
   Debt cancellation under Deuteronomy came with no financial penalties or long-term consequences, emphasizing trust in God’s provision and the importance of community. Modern bankruptcy, however, can affect credit scores, future loan eligibility, and personal assets. Additionally, it often involves stringent requirements to qualify, whereas Deuteronomy 15 offered a no-strings-attached release every seven years.
4. Focus on People vs. Profit
   Deuteronomy’s debt cancellation prioritizes people’s well-being and equality over economic growth or creditor profit. By contrast, modern bankruptcy balances between individual relief and protecting creditors’ interests. Although bankruptcy helps alleviate debt, it does not aim to eliminate the underlying systems that lead to financial strain for many people, like high-interest lending or medical debt.

Lessons from Deuteronomy’s Approach to Debt

While we may not reinstate a seven-year debt release, the values in Deuteronomy 15:1-11 offer enduring principles relevant to modern financial practices:

• Compassion Over Profit: Deuteronomy encourages a system where people’s needs are prioritized over maximizing profit, reminding us that individuals should not be weighed down by debt indefinitely. Society could benefit from policies that reduce predatory lending and provide fair financial services to vulnerable populations.
• Economic Justice: Deuteronomy’s debt release aimed to protect people from cyclical poverty, showing that economic justice is a core value. Modern systems might reflect this by offering more accessible debt relief options or reforming bankruptcy laws to ensure fairer treatment for debtors.
• Community Responsibility: Debt cancellation was everyone’s responsibility in ancient Israel, not just the debtor’s. Today, this principle might inspire stronger community and government support for those facing financial crises, like affordable healthcare, housing, and education options that reduce the likelihood of overwhelming debt.

Conclusion: Embracing a Heart of Generosity and Releasing Judgment

Deuteronomy 15:1-11 calls us to view debt through a lens of compassion and justice, valuing people’s dignity over financial obligations. While modern bankruptcy provides relief, Deuteronomy encourages us to think beyond individual solvency to a broader community responsibility that empowers people and prevents cycles of poverty. Whether through personal generosity, community support, or advocating for systemic change, we can embody the spirit of Deuteronomy by supporting a culture of economic compassion and fairness.

In doing so, we reflect God’s mercy and uphold a society where, instead of being weighed down by debt, people are given the chance to thrive and contribute fully to their communities.

So, if you must use bankruptcy to eliminate debt, file, then get on with your life. Guilt and shame will only bring about unnecessary stress.

Ask the Lord to help you to be a good steward of your finances. Here are a few scriptures about managing finances. Proverbs 13:11, 1 Timothy 5:8, Luke 16:11, Deuteronomy 8:18

Question: What are some ways we can become Legacy Builders? 

Story Time

Derick and I first considered filing for bankruptcy in our late twenties or early thirties. We were hesitant because we heard over the pulpit and from an attorney in the church that “You made the debt, you should pay it back”, so naturally we did not want the Lord upset with us. We felt the guilt and shame. After seeking God’s direction, researching and reading Deuteronomy chapter 15 we filed for Chapter 7 bankruptcy. We were happy, free, and got the fresh start we needed.

I recently heard a YouTuber say “Bankruptcy Saves Lives”. She said it funny and jokingly, but this IS based on a true story.

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