Christian Debt Solutions

So there is this phenomena that's sweeping the U.S. right now. The radio is swamped with advertisements from debt counselors, debt settlement firms, credit repair firms, and even loan modification firms. Realtors are specializing in helping people walk away from houses that aren't worth what people owe on them. Simply put - an entire "industry" has been risen up in the past couple of years around doing something with debt besides paying it.

It is certainly acceptable in our society. For decades we've had federal bankruptcy laws which allowed an individual (or business) to come before the court disclosing total assets and liabilities and making settlement on debts. Generally secured creditors got paid (or the collateral was voluntarily surrendered to the creditor) and unsecured creditors were not paid at all. It has been legal and businesses could budget for the credit losses because they knew the law and knew they could count on the courts to keep it fair.

There hasn't been much debate about whether bankruptcy is a moral issue. Even for Christians, our government seemed to make it acceptable. More than one third of all Americans have filed bankruptcy at least once in their lifetime. (Many have filed more than once.) Statistically, people who identify themselves as Christians don't really look any different either. They have filed bankruptcy, as nearly as anyone can tell, with about the same frequency as anyone else. (Maybe they just carry more guilt and shame for having filed bankrtupcy?)

But Romans 13:8 says that we are to pay our debts. "Let no debt remain outstanding." It seems very clear. And there are other Bible verses, in both the Old and New Testament, which make it clear that we are to do the right thing -- even if it's not covenient, even if it is costly and not in our best interests. Jesus said we are to treat others the way we want to be treated. Quite clearly, the Bible leaves no room for walking away from your debts.

However, I think I could accept some sort of "Christian loophole" for bankruptcy, since it is in submission to the laws of our land and the leaders that God put over us. But I would never encourage it or say it's okay. It would be like a woman having an abortion. It's clearly not Biblical, but the law allows it. I would hope though, that having gone through a bankruptcy or an abortion, the individual in question would have serious changes in the behaviors that got them into this situation in the first place. (If only our government would hold people accountable for that!)

So let's set legal bankruptcy aside and go back to this debt settlement, debt management ... or whatever it is that this so-called "industry" is puporting to do. Just because a lender can be conned into accepting less than the total amount due as a "settlement" doesn't make it right. In fact, it doesn't even make it okay. The Biblical mandate is not to pay our debts when we can, or to pay our debts when it's convenient our fiscally sensible. We are just to pay our debts. End of story.

So if you're a Christian and find yourself swamped with debt you cannot manage, what should you do? I have two recommendations, and neither of them are new.

First, there is a non-profit called Consumer Credit Counselin Service (http://www.cccs.net/). They have chapters in most metropolitan areas around the country. (Look on the web or in any phone book.) CCCS contacts all the creditors, negotiates a payment plan (not a settlement) and provides you with the accountability to stick to that plan. Your debts are all paid in full. It's Biblical. It's ethical. And you'll complete the plan over time, coming out of the plan in solid fiscal shape.

Second, there is a Chapter 13 bankruptcy (http://en.wikipedia.org/wiki/Chapter_13_bankruptcy). This is different from traditional bankruptcy in that the creditors generally get paid. Your finances are reorganized under the supervision and accountability of a federal court. Here again, your debts are typically paid in full. It's Biblical. It's ethical. And you'll complete the plan over time, coming out of the plan in solid fiscal shape. Occasionally the court will discharge some debt. But even that decision is made after a meeting of creditors. (It's a meeting where all your creditors come together to discuss how to work with you.)

Let's be clear here. These yo-yo's that are advertising debt settlement, debt management, credit repair and other such nonsense are leading their victims down some primrose lane of immorality. There is no such thing as a "strategic default" or a "debt settlement." Quite simply, when those things happen --- someone gets screwed!

Any choice that includes not paying all of your debts is unethical, not Biblical and immoral. So don't do it. Choose integrity. You'll be glad you did. The world will be a better place because of it too!