As a Christian finance writer, there are two topics that I approach with great fear; divorce and bankruptcy.  I remember in my early days as a Christian writer receiving a letter from a pastor scolding me for including a chapter on divorce and finances in one of my books.  The letter not only shared his disappointment in me for allegedly making divorce easier for people, he added that he would never buy any of my books and that I was banned from being a speaker at his church.  Despite my best efforts, and several paragraphs of disclaimers making clear that I was not advocating divorce, some readers would never forgive me for broaching the topic.  I have run into many of the same hurdles when addressing the issue of bankruptcy.  If I offer understanding and compassion to a caller in bankruptcy during a live radio show, I need not wait more than about five minutes to start seeing an influx of e mails rebuking me and even questioning my salvation.  I have struggled for years wondering why Christians are so judgmental about bankruptcy.  Jim discusses his bankruptcy for the first time on national TV (below).

In 2002 I was given the opportunity first hand, to an in depth education on bankruptcy.  I was going bankrupt.  I became completely convinced that this would be the death of my Christian financial writing and speaking career.  This time, I was not offering grace and understanding to someone else going through bankruptcy, it was me.  My accountant informed me in the spring of 2002, that my brother Carmen Paris (who was our internal accountant) had been embezzling from me for several years.  The amount lost was estimated at 2 million dollars, although they stopped counting after going through five years of bank records.  More details on my financial collapse - Click Here, Carmen G Paris Embezzlement.

I had hired an outside accounting firm, at an annual cost of $15,000 to $20,000 to audit my financial and accounting records.  Each year, I received a clean bill of health and was told that my finances were in perfect order.  In an elaborate embezzlement scheme, my bookkeeper was maintaining two sets of books and financial records.  The accountants were completely fooled and only when I switched auditing firms was the embezzlement uncovered.  I was left with no operating funds, and over a million dollars of debt that I was unaware of.  It was tough to accept, but I had only one option; bankruptcy.

I remember the day I was required to go to Federal bankruptcy court in Jacksonville, Florida.  It is a large white building with plenty of granite and marble in the entrance way.  Everything about this place screamed out intimidation.   About two hundred of us, soon to be bankrupt individuals, were herded into a dimly lit room.  We were to wait and as our name was called and then go to the front of the room and sit at a long table. At the other end of the table was the bankruptcy trustee.  He explained that it was his job to represent the creditors in our bankruptcy.  As each person was seated they were asked about five to ten questions.  In my case, the process took almost twenty minutes, which seemed like an eternity.  “Now, Mr. Paris, why are you filing for bankruptcy?” I was asked.    The trustee seemed extremely interested, especially when it came out that I was a financial writer.  “A Financial writer, so what was the title of your most recent book?”   I answered, Money Management For Those Who Don’t Have Any which caused us all to start laughing, to which I added, “How ironic, huh?”

Talk about humiliating, this was about as bad as it could get.  After I was excused, I sat back down in the back of the room to gather together all of my personal papers and I saw an elderly man go up to take his place at the table.  He was steadied on either side by two younger individuals that appeared to be his adult children.  The man could hardly speak he was crying so uncontrollably.  For a moment, my problems seemed trivial compared to the heartbreak I was witnessing.  The man explained through his tears how he could not pay his medical bills, and in order to save his mobile home, he was filing for bankruptcy.  There is a generation of our population that still views bankruptcy as perhaps the largest personal failing one can have in life.   This man was losing far more than money, it looked like life itself was being wrenched from his body.  Tears began to well up in my own eyes as I left the courthouse.  I had to wonder how anyone could not have compassion on such a soul as this? 

As I walked to the street I recognized a young man who had been called up to the table about a half hour before me.  I remember him sharing his story of a job loss, medical bills, and his home being in foreclosure.  He was sitting on a bench in the park with his head in his hands, apparently crying for quite some time.  As I looked over his shoulder I saw him holding a small booklet that said, Jesus Cares.  Perhaps a good Samaritan handed this to him while passing by and witnessing his grief.  How can we do anything but love and care for these people?  How can we sit in judgment of them in our piousness?  How can any of us be so confident that we may not end up in similar circumstances?

As I wrestle with this topic, I am continually drawn back to the spiritual parallel that God has placed in my heart.  We, being sinners unable to pay our debt, go to God through Jesus Christ to ask for forgiveness.  I truly believe that at the foundation of our Christian faith is what I call spiritual bankruptcy.   If we can accept the premise that God can forgive us for our spiritual debt, why can we not offer grace to those who face financial bankruptcy?  Even the Lord’s Prayer (Matthew 6:9-13) makes reference to the forgiveness of debts.  Of course, many will say this is not a financial debt and respond with Psalms 37:21, -The wicked borrow and do not pay back.  I am not a theologian, but I can not believe that somehow financial shortcomings, even those that were the result of outright sin or bad decisions can not be forgiven.  Not forgiving those who have had financial failings seems like a clearly unbiblical stance, but one that still seems to make the rounds today.  In my view, the wicked referenced in Psalms 37 would be today’s version of those committing financial fraud.  Borrowing with no intention of repaying or not repaying a debt when you have the ability to do so, seems like the principle here.  

I confess, there was a time in my early thirties that I looked around at my estate home, new cars, closet filled with designer suits, my six figure income, my red Corvette, and thought I was financially invincible.  I was prideful and believed that things would just keep getting better.  Despite losing all of my material wealth, I have to concede that I like the Jim Paris of today much more than the old one. 

I don’t know if it was good for me to have had a bankruptcy, but I know that as Christians, we are promised that all things can be used for good for those that love God and those that are called according to His purpose (Romans 8:28).  I believe that God has used my bankruptcy to change me for the better.  Rather than use my bankruptcy as a reason to stop my Christian financial teaching, I have chosen to embrace it.  This is now another opportunity for me to relate with those facing life’s most difficult financial challenges and to continue to keep my heart soft when pride threatens to return.

James L. Paris is the Editor-In-Chief of Christian and is the author of more than 30 books on personal finance.

Bankruptcy Advice

Bankruptcy is a very complicated legal issue and one that should be approached with extreme caution.  Filing for bankruptcy can have legal and financial implications that go on for many years.  After filing for bankruptcy, you may have a difficult time rebuilding your credit, although most people can do so in about three years.  Bankruptcy is a matter of public record and could affect your ability to obtain professional licenses, a high profile job, or even public office. 

Bankruptcy rates for thirty years have moved in lock step with the amount of personal debt that is accumulated by consumers.  The lesson; the more debt you accumulate the greater the chance that bankruptcy may be in your future.  Although most would agree that credit cards are the main culprit, automobile loans are now a significant factor, as well as adjustable rate and interest only mortgages.

The New Bankruptcy Law

In October of 2005 the bankruptcy laws of the United States were dramatically overhauled.  Credit card companies leading the way, convinced Congress to enact changes that would make it far more difficult for people to wipe out unsecured debts such as credit cards.  Under the old law, those filing for bankruptcy could choose a Chapter 7 (complete discharge of debts) or a Chapter 13 (a court monitored repayment plan).  Under the new law, based on your income, you may not be allowed to file a Chapter 7 Bankruptcy.