Bankruptcy's Moral Issues

The Christian Science Monitor ran an article on July 3, 2006, on moral issues involved in bankruptcy filing. I was interviewed for the article, and my picture and several quotes were included in the article.

I find the morality of bankruptcy, or of asset protection, to be a very interesting topic which most bankruptcy clients struggle with before filing. Very few people feel good about filing bankruptcy. Most bankruptcy debtors file as a last resort, and in many cases, they spend exempt assets which they could keep in bankruptcy trying to pay creditors. In my opinion, the morality of bankruptcy, as in most other moral issues, involves weighing competing moral considerations. As I told the reporter, people feel a moral obligation to repay debts but also a moral obligation to provide a home and support for their family. Different people will resolve that issued differently.

Another issue I discussed at length with the CSM reporter, but which was not included in the article, was a distinction between a moral obligation to repay a debt to a bank and an obligation to repay a debt to a friend or family member. A bank loans money to people for high interest rates in order to make a profit. A friend or family member loans money, usually with no or little interest, because they feel a moral obligation to help someone. In my opinion , there is a stronger moral obligation to repay a loan based on moral obligation than to repay a loan made at high interest to earn money. I recognize that other’s disagree.

Hopefully, articles like the CSM article will begin discussions through which people recognize that most bankruptcy debtors are moral and decent people.

posted by Jonathan Alper, bankruptcy and asset protection lawyer, Orlando, Florida