Don’t we have a moral obligation to pay our debts? If so, isn’t it immoral to discharge our debts in bankruptcy and not pay them?

Yes, we have a moral obligation to fulfill promises that we have made. But that obligation is not absolute. It has to be weighed against other moral obligations we may have. We may well have a higher moral obligation to release ourselves from those debts. It is a choice that we have to weigh carefully and conscientiously.

From one perspective, you could consider the decision whether to file for bankruptcy as merely a “business decision.” Corporations make business decisions to file “strategic bankruptcies” all the time. They make a cost-benefit decision that bankruptcy is the best way to reduce their debt so their business can survive and hopefully thrive in the future.

But you are not just a corporation. Humans are moral creatures, making decisions that weigh more than just costs and benefits. There’s more to life than dollars and cents. Our important choices are often moral ones, between doing what’s right and doing what’s wrong. If we don’t consider this moral component of the decision about filing for bankruptcy, we won’t be looking at the full picture.

So how do we make a good moral decision?

  1. Be honest with yourself (and with your spouse/closer friend/relative) about your previous choices – whether they were good or bad, sensible or short-sighted, intentional or forced – and what decisions and/or things outside your control got you where you are now. Acknowledge that you did make legal commitments to pay your debts, and think about what if anything you would have done differently.
  2. Understand that you don’t just have an opportunity to make a good decision moving forward. You actually have a moralobligation to make a good decision. Merely avoiding the issue out of fear or discomfort instead of facing the situation honestly means the decision will be made in an unprincipled way. This is likely not your wisest move.
  3. Get the right advice so that you are well informed about your alternatives. You actually have a moral obligation to get good legal advice! Why? Because you can’t make morally good choices about your legal commitments without clearly knowing the legal alternatives about each of those commitments. You cannot know whether there are more morally acceptable ways for you to deal with your creditors – such as to file a Chapter 13 payment plan instead of a “straight” Chapter 7 – if you don’t know your legal options.
  4. Weigh each of your legal options in light of all your various obligations – NOT just your one-sided obligation to your creditors. What are your other valid moral obligations – to yourself, to your spouse, to your kids and to anyone else involved? Look at both the moral costs and benefits if you were now to continue to try to meet those financial commitments. A moral benefit would be keeping your promises to pay. But the weight of this benefit depends on the circumstances of your promise. To take an extreme example, how strong of a promise to pay does a person make about an emergency ambulance bill when somebody called the ambulance on his behalf when he was unconscious? Or when you used a credit card to put food on the table for your family? As for the moral costs of keeping your promise to pay, what would be the cost to your physical and emotional health, your marriage and family relationships, and whatever other responsibilities you have to your community? You have moral obligations not just to your creditors, but also to yourself and to others.

This is a clearly a very personal decision, one you need to work through until you’re satisfied with it. In this, you should get help from the right people and resources in your life instead of doing it all alone. Do whatever you know helps you make a good decision – talk to your closest friends, pastor, or mentor, write in your journal – whatever method works for you. And then come to closure. Don’t let it gnaw at you. Take the appropriate time and effort to make the decision, act on it and then move on.

If you are in the Dallas area, we can help you with the legal advice and counsel part of this. Please contact us at The Law Offices of Roger Fuller using that link or by calling 214-516-6187. We provide a no-charge consultation. We have helped many hundreds of Texans like you. Let us do the same for you.