david's dialogue

The term Debt” in this article refers to money received in a credit or loan transaction. “Debt” herein does not refer to court fines, criminal fines or restitution, or support obligations. There was an ancient practice, if a person could not repay their debts, they would be thrown into prison until they somehow figured out how to repay their debts. This concept is so ancient it is mentioned as a fact in the Gospels. 

    Therefore is the kingdom of heaven  

    likened unto a certain king, which 

    would take account of his servants.

    And when he had begun to reckon, 

    one was brought unto him, which

    owed him ten thousand talents.

    But forasmuch as he had not to pay, 

    his lord commanded him to be sold,    

    and his wife, and children, all that he 

    had, and payment to be made.

    The servant therefore fell down, and 

    worshipped him, saying, Lord, have 

     patience with me, and I will pay thee

     all.

     Then the lord of that servant was 

      moved with compassion, and loosed 

      him, and forgave him the debt.

      But the same servant went out, and 

      found one of his fellow-servants, 

      which owed him an hundred pence:  

      and he laid hands on him, and took

      him by the throat, saying, pay me

      that thou owest.

      And his fellow-servant fell down at 

      this feet, and besought him, saying, 

      Have patience with me, and I will pay

      thee all.

      And he would not: but went and cast

      him into prison, till he should pay the

      debt.

      …

      Mt. 18:23-30 (KJV)

The foregoing passages indicate that a king (the government) could sell a debtor, his family, and all that he owned, to repay his obligations to the sovereign. Lesser people could only have their debtors cast into prison until they repaid their debts. Quite harsh treatment for enforcing repayment of debts.

Debtor prison actually survived enactment of the U.S. Constitution and was part of American legal proceedings until well into the 19th Century. This practice, of using incarceration to enforce unpaid debts, was eventually abolished as too barbaric a process for 19th Century America.

Over time, some judges have had occasion to reflect on the process of debtor prisons in cases before them. 

     The policy of allowing a fresh start 

      [bankruptcy] does not license debtors

      to lightly rid themselves of the burden

      of their indebtedness without an

      honest attempt at repayment. Yet

      neither does that policy compel

      debtors, in Dickensian fashion, to

      labor for the rest of their lives under 

      the crushing weight of gigantic debt; 

      under our law, the world is not to be 

      made a debtor's prison by a lifelong 

      sentence of penury.

      In re Young, 237 F.3d 1168, 1178 

      (10th Cir. 2001)

The foregoing quote, artfully expresses the interplay of the U.S. Bankruptcy Court system, with the finality of having to repay debts at some point. The U.S. Bankruptcy Code sets forth the standards a debtor must meet if they can no longer repay all of their debts. If a debtor meets those standards, they are relieved of the prospect of paying on their debts, for a lifetime. 

     As everyone knows, bankruptcy is an 

     act of grace, having for its purpose 

     and object the highly remedial one of 

     doing away with the burdens and 

     disabilities which in the olden days, 

      before its passage, followed a man's 

      heavy involvement in debt, some-

      times sent him to debtor's prison, 

      and, even after imprisonment for   

      debt was abolished, broke and 

      destroyed the lives of persons whose

      chief fault was that they had dared to

      take a chance in the business world. 

      Fidelity and Deposit Co. of Maryland,

      v. Browder, 291 F.2d 34, 41 (5th Cir.

      1961) dissent

Another interesting view of bankruptcy as a means of resolving a debtor’s inability to repay all of their debts. In this passage, a Federal appellate judge viewed bankruptcy relief as “an act of grace.” Bankruptcy as “an act of grace,” instead of prison, for debts lawfully obtained and honestly unable to be repaid. This judge also recognized, in a capitalist economy, business owners are risk takers. If the business failed, their debts could ruin their future, but for the “grace” of the U.S. Bankruptcy Court system. 

If you find yourself considering bankruptcy as an option for relief from an unpaid debt burden, consider why the U.S. Bankruptcy Code was created, and then whether it is the correct option for your situation. 

We are a debt relief agency that assists people to file bankruptcy.

[April 23, 2021] 

March 15, 2019

Before an individual or married couple files a bankruptcy petition they have to qualify for the relief they seek based upon their annual income and family size. The process for an individual or married couple to qualify for bankruptcy relief is beyond the scope of this article. However, once an individual or married couple initially qualifies for bankruptcy relief that is not the end of the inquiry.

Bankruptcy relief is not available to everyone who qualifies for bankruptcy. Bankruptcy relief is intended for "the honest but unfortunate debtor."[1] Bankruptcy courts that have dealt with this issue have made it clear that a bankruptcy discharge relieves a debtor from the legal obligation to repay their debts. A bankruptcy discharge is a legal injunction that bars creditors from collecting on a debt subject to a completed bankruptcy case.[2] However, the moral obligation to repay debts is not discharged in a bankruptcy proceeding.[3] This dichotomy is contained within the U.S. Bankruptcy Code. "Nothing contained in ... this section prevents a debtor from voluntarily repaying any debt." 11 U.S.C. §524(f).

Voluntarily repaying a debt after discharge should not be confused with making a new agreement with a prior creditor to repay an old debt. If you make a new agreement to repay a debt, after it was discharged, you may be contractually responsible to repay that debt. There is an old line of bankruptcy case law that held as much. That case law has been abrogated by statute. However, it is best to avoid this grey area by paying pursuant to your conscience and nothing more. Moral obligations do not require contracts.

For those who need bankruptcy relief, but do not want to file for such relief because of the moral obligation to repay their lawful debts, understanding that the moral obligation remains after entry of a bankruptcy discharge can resolve this quandary. Most people cannot survive a 25% garnishment of their pay after a creditor obtains a judgment against them.[4] If a family's home is in foreclosure, because of a loss of income, a Chapter 13 reorganization can stop the foreclosure from going forward and allow the home-owner up to 5 years to cure the arrears on their mortgage that lead to the foreclosure. There are sensible reasons for a person or family to file a bankruptcy petition other than merely a desire not to repay their creditors.

If you find yourself under threat of a 25% reduction of your wages because of a garnishment, or the loss of your home through foreclosure, you can pursue bankruptcy relief to stop the loss of your home or the inability to pay your living expenses. Once the financial threat has been addressed through a bankruptcy filing, then you can review your finances and decide how to meet the moral obligation to repay your debts. After filing bankruptcy and the discharge of your debts such creditors cannot force you to repay them. This allows you the time to decide whom and how to best repay your moral obligation to past creditors. 

If you find that you were unable to repay your creditors, after filing bankruptcy and receiving a discharge of your debts, then bankruptcy was a necessary remedy to address garnishment or foreclosure. Failing to address financial issues for moral reasons, when the money was not available to pay your creditors, could result in falling behind on your utility bills, repossession of a vehicle, or being homeless. 

Filing a bankruptcy petition may not be the remedy of choice but it has been an option since the foundation of our country as it is provided for in the U.S. Constitution.[5] 

We are a debt relief agency we assist people in filing for bankruptcy. 

[1] Grogan v. Garner, 498 U.S. 279, 286 (1991). 

[2] 11 U.S.C. §524(a). [3] In re Luciani, 584 B.R. 449, fn 4 (Bankr. Mass., 2018) [4] A.R.S. 33-1131(B) [5] Article I, Section 8, Clause 4.

[March 15, 2019]