Bankruptcy

Abstract

"The social phenomenon of bankruptcy is one that is increasingly familiar to many Americans. In the past decade, major companies previously thought to be virtually invulnerable - airlines, hotel chains, real estate developers - have found it necessary to seek relief under federal bankruptcy law. In a given year, there are more bankruptcy cases filed in federal court than all other cases put together. As is true for all issues of social life, bankruptcy too is subject to a Jewish perspective. The central issue I would like to address is whether it is morally proper for a religious Jew to try to escape payment of debts by invoking bankruptcy relief. 1 At the outset, it must be recognized that the Torah considers the obligation to pay debts as absolute. There is, of course, a mitzvah in the Torah of giving charity (tsedokeh) and the Rambam tells us that the highest form of charity is making a loan to somebody because a loan is enabling someone to achieve self sufficiency. Therefore, according to the Torah, loans were not business propositions, loans were not investments. Loans were acts of charity, benevolence and generosity. That is form of tsedokeh. At the same time, however, the debtor's obligation to pay is considered to be an absolute obligation and there is no mechanism in halakhah that is tantamount to escaping your debts by filing a bankruptcy and obtaining a discharge.2"(pg 1)