The Bible doesn't specifically address whether a church may borrow money to build or expand its facility. In our opinion, such debt is permissible if the church leadership clearly senses the Lord’s leading to do so. If a church borrows, we recommend that it raise as much money as possible for the down payment and establish a plan to pay off the debt as rapidly as possible.
A growing number of churches have chosen to build without the use of any debt. For many of these churches, the members’ faith has increased as they have observed the Lord providing the necessary funds, and they have been encouraged to become debt free themselves.
DEBT REPAYMENT RESPONSIBILITIES
Many people delay paying creditors until payments are past due, even when they have the money. On this practice, however, the Bible is crystal clear. In Proverbs 3:27-28 we read: “Do not withhold good from those to whom it is due, when it is in your power to do it. Do not say to your neighbor, ‘Go, and come back, and tomorrow I will give it,’ when you have it with you.”
Godly people should pay their debts and bills as promptly as they can. Some try to pay each bill the same day they receive it, to demonstrate to others that knowing Jesus Christ has made them financially responsible.
Using your savings
In our opinion, it’s not smart to use all your savings to pay off debt. Follow the Compass map, and keep three months’ living expenses set aside for emergencies.
A court can declare people bankrupt and unable to pay their debts. Depending on the type of bankruptcy, the court will either allow them to develop a plan to repay their creditors or it will distribute their property among the creditors as payment.
Should a godly person declare bankruptcy? Generally, no. Psalm 37:21 tells us, “The wicked borrows and does not pay back.”
However, in our opinion, bankruptcy is permissible under two circumstances:
- When a creditor or circumstances force a person into bankruptcy. There are occasions when bankruptcy is the only viable option when the financial challenges become too extreme to reverse. That option needs to be exercised only after all others have been explored.
- When the emotional health of the borrower is at stake. If the debtor’s emotional health is at risk because of inability to cope with the pressure of aggressive creditors, bankruptcy can be an option.
Declaring bankruptcy should never be a cavalier decision, because it remains on a credit report for ten years, and often impairs one’s ability to obtain future credit at reasonable interest rates. Potential employers and landlords are also likely to learn of a past bankruptcy. It can haunt people for years, and although it provides relief, it’s not exactly the fresh start that some advertise.
After a person goes through bankruptcy, he should seek counsel from an attorney to determine if it’s legally permissible to repay the debt, even though he is not obligated to do so. If it’s allowable, every effort should be made to repay the debt. For a large debt, this may be a long-term goal that is largely dependent upon the Lord supernaturally providing the resources.
Cosigning relates to debt. Anytime you cosign, you become legally responsible for the debt of another. It’s just as if you went to the bank, borrowed the money, and gave it to your friend or relative who is asking you to cosign. In effect, you promise to pay back the entire amount if the borrower does not. A Federal Trade Commission study found that 50 percent of those who cosigned for bank loans ended up making the payments. And 75 percent of those who cosigned for finance company loans ended up making the payments! Those are pretty good odds that if you cosign, you’ll pay. The casualty rate is so high because the professional lender knows the loan is a bad risk, and told himself, I won’t touch this loan with a ten-foot pole unless I can get someone who is financially responsible to guarantee its repayment.
Fortunately, the Bible gives us clear direction about cosigning. Proverbs 17:18 says, “It is poor judgment to countersign another’s note, to become responsible for his debts” (NLT). The words “poor judgment” are literally translated “destitute of mind”!
A parent often cosigns for his or her child’s first automobile. We decided not to do this. We wanted to model for our children the importance of not cosigning, and to discourage them from using debt. Instead, we encouraged them to think ahead and save for the purchase of their first cars.
If you have already cosigned for a loan, the Scripture has counsel for you, too. Get out of it as fast as you can!
Proverbs 6:1-5 says, “Son, if you endorse a note for someone you hardly know, guaranteeing his debt, you are in serious trouble. You may have trapped yourself by your agreement. Quick! Get out of it if you possibly can! Swallow your pride; don’t let embarrassment stand in the way. Go and beg to have your name erased. Don’t put it off….. If you can get out of this trap you have saved yourself like a deer that escapes from a hunter, or a bird from the net” (TLB).
Please use sound judgment and never cosign.