The Religious Roots of Bankruptcy
Justice and Righteousness
There is a phrase that appears in many ancient Jewish texts, especially in the prophets and the Psalms, that is ordinarily translated as "justice and righteousness". Several examples show that "justice and right" is understood both as a gift of God and as the responsibility of fair government. The core of the Jewish scriptures and the books of the prophets are full of calls for limits on the exploitation of the poor or those in economic distress. This tradition influenced and shaped Christianity.
There is debate or even doubt that the aspirations of ancient Israelites for a royal commitment to economic regulation was achieved or practiced. But the important thing is not whether the ideal of the just king was often or ever realized, or how inextricably it was associated at the time with the royal ideology and propaganda. The important truth is the existence and canonization in scripture of the ideal itself.
The definition of the just society that emerges from the Jewish scriptures, called the Old Testament by Christians, is a society where exploitative practices are actively suppressed. One exploitative practice addressed is the tendency for debtors to fall behind and stay in impossible debt for life.
He has compassion on the poor and the needy, and saves the lives of the needy. From oppression and violence he redeems their lives, and precious is their blood in his sight. - Psalm 72.
Jubilee and the Year of the Cancellation of Debt
There are several well-known sections of the Old Testament, sacred to multiple western traditions, that focus on economic renewal and fairness as an aspect of solidarity of the community. They include the jubilee law in Leviticus 25.8-22, which prohibits the permanent alienation of agricultural land, and the law in Deuteronomy 15.1-3 which orders the cancellation of debts every seven years.
These traditions influenced Christian faith. They show a religious commitment to the national community as a family by referring to fellow Israelites as "brothers". Allowing a fresh start in loans or contracts against land and other forms of debt represents at least an attempt to limit extreme class divisions actually present in ancient Israel.
These texts may have been simply aspirational. There is some indication they embodied what had once been laws enforced by the Kings of Israel. At the very least, the texts place a general duty of fairness and economic renewal on society as a whole. The right to emerge from debt and to celebrate the jubilee may be seen as indicating that societal tools for the forgiveness of debt strenghten society and are supported by a religious history that sees both spiritual health and national unity bound up in debt forgiveness for those who truly need it.
What does the Bible say about Bankruptcy and Debt?
This can only serve as an introduction to that question. The information is far too little for the importance of the topic. It is important to start the discussion and state a position. As you can see, I think the Bible, or the Torah, or the prophetic books, and even the apocrypha all speak directly to the need for each of us to be free from debt and in control of our own lives. To be free from permanent indebtedness reflects a system of justice focused on human dignity and community over profit and enmity.