The moral burden of bankruptcy

Consumers daunted by mountains of debt face another uphill climb as they sort through mixed messages on the moral implications of filing for bankruptcy.

On one side, Christian conservatives who applauded last year's tightening of bankruptcy laws are now appealing to higher authority to tweak the consciences of would-be defaulters. On the other side, voices irked by double-digit interest rates and questionable marketing tactics of credit-card issuers say debtors are often morally justified in seeking relief.

The morality debate is heating up amid signs of trouble for people living on the margins:

•Even though tougher filing laws took effect Oct. 17, the number of monthly bankruptcy filings grew by more than 300 percent between November and March, from 13,758 to 49,977, according to a June report from the Administrative Office of the US Courts.

•Foreclosures on home mortgages were up 38 percent nationally in the first quarter of 2006, according to property tracker RealtyTrac Inc.

•The average American household owes more than $9,300 on credit cards, up from $2,966 in 1990, according to Cardweb.com.

Against this backdrop, advocates for and against the use of bankruptcy disagree about where to lay the blame when someone gets buried in debt.

Christian personal finance guru Mary Hunt has a stern message for anyone considering bankruptcy: "It's absolutely legal, but it is not moral."

"I would say, 'You accepted these credit cards. You had the obligation to know what you were getting into,' " says Ms. Hunt, author of "Living Your Life for Half the Price." " 'You spent the money, and sure you had a big medical bill, but it probably would not have put you over the edge had you not already been deeply in debt.' "

To make this case, bankruptcy's critics often cite Psalm 37:21: "The wicked borrow and do not repay, but the righteous give generously." From sources such as Crown Financial Ministries and Dave Ramsey's nationally syndicated radio show, advice seekers hear they have a duty in most cases to keep their payback promises even when life throws them a curve ball.

But another school of thought sees a more complex picture in which lenders also face admonitions to forgive debts. For instance, Jonathan Alper, a bankruptcy attorney in Orlando, Fla., reminds distraught clients that the American legal tradition of allowing for bankruptcy stems from Deuteronomy 15:1-11, which calls for debt forgiveness every seven years. Others agree with Mr. Alper that those who are able should repay, but those unable to do so should not feel guilty.

In Psalm 37, "the psalmist is talking about [cases where] borrowing money and not repaying it becomes a business strategy," says Gary Moore, a Christian investment adviser in Sarasota, Fla. By contrast, he says, single women should not worry about declaring bankruptcy, for instance, after using credit cards to feed their children.

"Those people ought to go to bed every night knowing that God has granted them debt relief," Moore says. "And they're not, because they hear this garbage [from antidebt Christians]. That's what Jesus called placing heavy burdens on his flock."

"May," a Virginian who requested anonymity to protect her reputation, knows the moral struggle well.

For 14 years, she paid the minimum balance due until she maxed out her credit card on routine purchases such as shoes, clothes, haircuts, gifts, and equipment for her dog-grooming business. Charges initially worth $5,000 resulted in a balance of $10,000, even after she increased her payments to $150 per month. Every day, she hid the mail before her husband could see her predicament, and she remembers wishing "I could go to sleep and not wake up." Yet she kept paying back her debts at close to 20 percent interest.

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