Not automatically, and the reason surprises people: legal release from unpayable debt is a
biblical idea, not a modern loophole.
Israel's law had a release every seventh year, and a jubilee that returned land and freed
people sold into service by poverty. Nehemiah forces creditors to hand back fields and
vineyards taken from famine-struck neighbours. Jesus tells a story about a servant whose
impossible debt is simply cancelled, and the villain of it is the man who, having been
forgiven, refuses to release someone else. A society with no mechanism for unpayable debt
is not the society Scripture describes.
At the same time repayment is a moral obligation, and the wicked borrowing and not repaying
is a real verdict. So bankruptcy is not neutral. Filing while able to pay, or borrowing
with the intention of discharging it later, is the thing Scripture actually condemns.
A workable summary: if the debt is genuinely unpayable, using the legal release is not sin.
Take counsel before filing, pay what you can, tell your creditors the truth, and if your
situation later changes, many believers repay what was discharged even though nothing legal
requires it. That instinct is exactly right.
The passages
Printed in full from the public-domain World English Bible, resolved from a local copy of
that text before this page was built. Read them before you take our summary on trust, and
see how we read Scripture on money for the ten rules
every page here follows.
1At the end of every seven years, you shall cancel debts. 2This is the way it shall be done: every creditor shall release that which he has lent to his neighbor. He shall not require payment from his neighbor and his brother; because Yahweh’s release has been proclaimed. 3Of a foreigner you may require it; but whatever of yours is with your brother, your hand shall release. 4However there shall be no poor with you (for Yahweh will surely bless you in the land which Yahweh your God gives you for an inheritance to possess it) 5if only you diligently listen to Yahweh your God’s voice, to observe to do all this commandment which I command you today. 6For Yahweh your God will bless you, as he promised you. You will lend to many nations, but you will not borrow. You will rule over many nations, but they will not rule over you. 7If a poor man, one of your brothers, is with you within any of your gates in your land which Yahweh your God gives you, you shall not harden your heart, nor shut your hand from your poor brother; 8but you shall surely open your hand to him, and shall surely lend him sufficient for his need, which he lacks. 9Beware that there not be a wicked thought in your heart, saying, “The seventh year, the year of release, is at hand”; and your eye be evil against your poor brother, and you give him nothing; and he cry to Yahweh against you, and it be sin to you. 10You shall surely give, and your heart shall not be grieved when you give to him; because that for this thing Yahweh your God will bless you in all your work, and in all that you put your hand to. 11For the poor will never cease out of the land. Therefore I command you to surely open your hand to your brother, to your needy, and to your poor, in your land.
A statutory release of debts every seventh year (most read it as cancellation, some as a year's suspension), with a warning against refusing to lend as it approaches.
39“‘If your brother has grown poor among you, and sells himself to you; you shall not make him to serve as a slave. 40As a hired servant, and as a temporary resident, he shall be with you; he shall serve with you until the Year of Jubilee: 41then he shall go out from you, he and his children with him, and shall return to his own family, and to the possession of his fathers. 42For they are my servants, whom I brought out of the land of Egypt. They shall not be sold as slaves. 43You shall not rule over him with harshness, but shall fear your God.
23Therefore the Kingdom of Heaven is like a certain king, who wanted to reconcile accounts with his servants. 24When he had begun to reconcile, one was brought to him who owed him ten thousand talents. 25But because he couldn’t pay, his lord commanded him to be sold, with his wife, his children, and all that he had, and payment to be made. 26The servant therefore fell down and knelt before him, saying, ‘Lord, have patience with me, and I will repay you all!’ 27The lord of that servant, being moved with compassion, released him, and forgave him the debt. 28“But that servant went out, and found one of his fellow servants, who owed him one hundred denarii, and he grabbed him, and took him by the throat, saying, ‘Pay me what you owe!’ 29“So his fellow servant fell down at his feet and begged him, saying, ‘Have patience with me, and I will repay you!’ 30He would not, but went and cast him into prison, until he should pay back that which was due. 31So when his fellow servants saw what was done, they were exceedingly sorry, and came and told their lord all that was done. 32Then his lord called him in, and said to him, ‘You wicked servant! I forgave you all that debt, because you begged me. 33Shouldn’t you also have had mercy on your fellow servant, even as I had mercy on you?’ 34His lord was angry, and delivered him to the tormentors, until he should pay all that was due to him. 35So my heavenly Father will also do to you, if you don’t each forgive your brother from your hearts for his misdeeds.”