Wednesday, December 7, 2011

Is Bankruptcy Immoral?

In our legal system in the U.S. we have provided for way for debtors who cannot pay their debts to go to court and obtain a discharge from certain types of debts. That means essentially that the bankrupt person does not ever have to pay those debts and the creditors can do nothing to collect the discharged debts. Historically, people who could not pay their debts were sent to prison. Our system is somewhat more humane but is it moral?

I am using the term moral to refer to decisions made by people that are counter to the teachings of the Bible and are concerned with the principles of right and wrong behavior and the goodness or badness of human character. Ben Franklin, wrote: Think what you do when you run into debt; you give to another power over your liberty.

In more recent times, bankruptcy was considered both a financial and moral failure whatever the cause of the bankruptcy. In a talk given in 1957, Ezra Taft Benson, then a member of the Quorum of the Twelve of The Church of Jesus Christ of Latter-day Saints, outlined the dramatic increase in the influence of the U.S. Federal Government. More than fifty years later his words appear even more prophetic than they did at the time especially in light of the huge federal deficit (debt). At the time the debt owed by the government was a mere $277 billion.

About the increased influence of the Federal Government, he said, "Many forces work together toward the concentration of power at the federal level. Our people have come to look to the federal government as the provider, at no cost to them, of whatever is needful. If this trend continues, the states may be left hollow shells, operating primarily as the field districts of federal departments and depending upon the federal treasury for their support."

Ezra Taft Benson went on to say, "History teaches that when individuals have given up looking after their own economic needs and transferred a large share of that responsibility to the government, both they and the government have failed."

 Here in this talk by Ezra Taft Benson is the key to understanding the morality of bankruptcy, "Another reason for the increase in debt, I believe, is deeper-and causes greater concern. This is the rise of materialism as contrasted with spiritual values. Many a family, in order to make a “proper showing,” will commit itself for a larger and more expensive house than is needed, in an expensive neighborhood. Again almost everyone would, it seems, like to keep up with the Joneses. With the increasing standard of living, that temptation increases with each new gadget that comes on the market. The subtle and carefully planned techniques of modern advertising are aimed at the weakest points of consumer resistance. And there is a growing feeling, unfortunately, that material things should be had now, without waiting, without saving, without self-denial."

It is not that bankruptcy itself, necessary in some situations, is immoral, it is the behavior of those who use bankruptcy to excuse their immoral behavior. Continuing on with quotes from Ezra Taft Benson, "All of us as individuals-and above all, as members of families-have an obligation in conscience not to mismanage our resources...Truly, man does not live by bread alone. A good name is still to be preferred to great riches. Especially is it to be preferred to the appearance of riches, acquired with nothing down and nothing to pay for two months... Stewardship, not conspicuous consumption, is the proper relationship of man to material wealth."

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