The Morality of Bankruptcy: A Conversation with Legal Scholar David Skeel

Interview with Professor David Skeel

University of Pennsylvania Law School

Thinking in Public

November 1, 2010

(This is a rush transcript.  This copy may not be in its final form and may be updated)

Mohler: This is “Thinking in Public”, a program dedicated to intelligent conversation about front line theological and cultural issues with the people who are shaping them.  I’m Albert Mohler, your host, and President of The Southern Baptist Theological Seminary in Louisville, Kentucky.

The issue of bankruptcy is front and center in the American consciousness right now and it’s also tearing at the American conscience.  How should Christians think about the issue of bankruptcy?  And the larger question of our economic responsibility the question of debt.

Mohler: David Arthur Skeel is the Arsht Professor of Corporate Law at the University of Pennsylvania’s College of Law.  He’s also one of the world’s most recognized experts in bankruptcy and related issues.  We’re talking here about the intersection of the worlds of economics, and finance, and law, and morality.  David Skeel, welcome to Thinking in Public.

Skeel: Thanks so much for having me.

Mohler: You know when we start thinking about the issues of bankruptcy all of a sudden these come with a very, well, relevant kind of urgency.  Given the economic transformations especially of the Great Recession going back to the third quarter of 2008 I’m assuming that there’s much more demand for your teaching expertise in the area of bankruptcy perhaps now than in any other previous time.

Skeel: It certainly has become a very hot issue.  This seems to go in cycles.  There were periods in the 1990’s when it was true as well.  But I think it’s fair to say bankruptcy has never been as much on people’s minds in my lifetime at least as it is now.

Mohler: Well one of the reasons I felt this conversation would be helpful is because I think most of us have only a vague conception, a lay knowledge, of bankruptcy.  Could you just kind of bring us up to speed on how the very notion of bankruptcy as a legal concept came to be?

Skeel: Well it goes back as far as you want it to go back historically.  There are antecedents of bankruptcy going all the way back to the Roman Empire.  But in America and in England it goes back four or five hundred years to a time when, like today, lots of debtors were overextended and England concluded that everybody would be better off if there were a way to discharge those obligations and to make sure the debtor pays what they can.  So in America the backdrop was what England has done with bankruptcy.  Once we got across the Atlantic to America in the 19th century bankruptcy was a very controversial issue throughout the century.  So we had four different bankruptcy laws-we had one in 1800, one in 1841, one in 1867 and then we didn’t finally get a permanent bankruptcy law until 1898.  Each time with the earlier laws, there would be a severe economic crises like the one we’re in now, a law would be passed and then when the crises passed, the law would be repealed.  So for a hundred years we did not have a permanent law.  Since 1898, we have had a permanent law.

Mohler: Now what are the varieties of bankruptcy?  Because we hear about chapter this and chapter that.  This is not just one legal reality is it?

Skeel: It is not.  If a person or a business files for bankruptcy they have to choose what kind of bankruptcy they file for and they choose what’s known as the chapter.  You would choose, if you were a person, you would choose either chapter seven or chapter thirteen.  If you are a business you would choose chapter seven or chapter thirteen and what those chapters have to do with is just the numbering of the provisions.  Chapter seven is provisions in the seven hundreds, eleven is in the eleven hundreds, thirteen is in the thirteen hundreds.  The two basic forms are a liquidation or an immediate bankruptcy and for an individual that’s chapter seven.  Or, a bankruptcy where the individual enters into a plan to pay some or all of what they owe over a three-five year period that’s chapter thirteen or what’s sometimes called wage earners bankruptcy or rehabilitation plan.  So for an individual the main choices are seven and thirteen.  Seven is just immediately discharged from your debts.  Thirteen is you enter into a plan to pay some of them back.  For a business they have similar choices.  For business the two main choices are chapter seven which is liquidation somewhat similar to what an individual would do or chapter eleven and chapter eleven is entering into a reorganization plan.

Mohler: Now when we hear about businesses going chapter eleven a lot of people think that means they’re going out of business.  But generally it means that they’re trying not to go out of business.

Skeel: Absolutely.  This is one of the most long lived misconceptions about American bankruptcy.  The misconception that bankruptcy equals financial death that when you file for bankruptcy it’s all over.  When a company files for chapter eleven ordinarily they are assuming they are not going to be ending the company.  They’re going to negotiate with their creditors, enter into a restructuring arrangement and then come out hopefully more healthy than when they went into bankruptcy.  Just to think of a big common example most of the American airlines that you fly on whether you fly on Delta or US Air or whatever it is, almost all of them have been through bankruptcy.

Mohler:  Well and to some extent the federal government has flirted with bankruptcy.

Skeel: They have both at the federal level and at the state level.  So a question I’m often asked is, with a state like California that’s in horrendous financial shape, can they file technically for bankruptcy, and the answer is no.  There’s no bankruptcy provision that applies to states.  There are bankruptcy provisions that apply to cities.  There also are not bankruptcy provisions that apply to the federal government although in an ordinary persons’ sense, the government could be bankrupt if we’re incapable of paying back what we owe.  And unfortunately it’s quite possible we could be facing that down the road.

Mohler: Let me see if I have the scenario right here.  We’re looking at the need for bankruptcy provisions.  It would come down to the fact that there are conflicting or incommensurate interests.  You have a debtor, and you have a lender and you have a new situation, I mean obviously the lender supposedly would lend the money assuming that the debtor can pay it back.  But when the financial situations and economic conditions change well that’s when you end up with a need for some way to get out of the problem.  Now is bankruptcy an attempt to achieve the fairest resolution?

Skeel: It is and different people’s view of what the fairest resolution should look like are going to differ over time and the American bankruptcy laws change from time to time.  But it is an effort to achieve the fairest resolution.  When the founding fathers put the Constitution in place they believed that we ought to have a bankruptcy law in place.  They actually thought bankruptcy was essential to a commercial economy and they were operating on the same kinds of assumptions that there are times when if there is a crises we need some sort of framework for deciding what to do about it.  And we’re better off if we plan for that in advance by having a bankruptcy law then we would be if we didn’t do any planning.

Mohler: And just to put it in historical context, there once was a time even in our own civilizational tree and lineage where the answer to failure to pay debt was a debtor’s prison or a debtor’s colony or something of the like.

Skeel: That’s right.  I’m sitting in an office in Philadelphia right now just a few blocks from where I am, there was a debtor’s prison.  And a number of fairly prominent people from the founding era found themselves in debtor’s prison.  That was the standard response if you were unable to pay what you owed.  And you stayed in debtor’s prison until your friends or your family could come up with the money to pay the creditors.  So we have moved a long ways from there.  You can no longer be put in prison for your debts but that is where we started.

Mohler: Well, if you put this in a historical perspective then what we see is bankruptcy is something of an improvement of a something of a hallmark of social progress.  But it also points out the fact that there is a great deal of economic brokenness.  There is the reality of unpaid debts and the one who has lent the money well that person or bank or lending agency, obviously has an interest here.  And that gets us to another word that I really need your help to define.  And that is to put the word foreclosure in an understandable context for us.

Skeel: What a foreclosure is, is when a bank has lent money to a homeowner and the homeowner cannot pay the foreclosure is the legal process by which the lender takes control of the home and sells it to try to pay off some of what the obligation is.  Foreclosure goes back a long way.  Foreclosure was used when debtors couldn’t pay their obligations particularly on something like a house back into the 19th century.  So what we’re seeing today is something that’s been around for a long time, and it’s something that people worried about for a long time.  In the 19th century when there were economic crises debtors and people who were sympathetic to debtors they actually fought against bankruptcy laws because they thought bankruptcy would make foreclosure too easy.  Now, we don’t really think that way and foreclosure is ordinarily done outside of bankruptcy.  It’s a separate legal process that the lender starts in order to, at least in theory, sell the property.

Mohler: Now looking at this from the larger perspective.  I guess one question that immediately comes to my mind is this.  In our current economic system do we basically kind of factor in a certain margin of bankruptcies in order to understand what it would mean to have an economy that’s active and live and at least putting some capital at risk?

Skeel: We do and the phrase that’s often used in my line of work, which you’ve probably heard as well, is creative destruction.  I mean it’s sort of a terrible sounding phrase but the idea is if you have a truly vibrant economy some businesses are going to succeed and some businesses are going to fail or going to struggle.  And bankruptcy is the way that we deal with the struggling or failing businesses and it’s true for individuals as well.  So it is about brokenness, but it’s also the case that an economy that doesn’t have bankruptcy is probably an economy that is not very vibrant.  For instance, I’m working with some scholars from China.  China  historically has not really had a bankruptcy approach because they don’t allow businesses to fail.  They are now trying to move in a more American direction in this regard.  So bankruptcy is about brokenness but it is also about the vibrancy of the economy.

Mohler: Looking to the future, given what we have learned, or perhaps should have learned from the most recent recession and its aftermath, do you foresee any major changes in bankruptcy law moving forward?

Skeel: I really don’t.  The one bankruptcy change that people have talked about the most that’s relevant to the foreclosure context is under current bankruptcy laws an individual who files for bankruptcy essentially cannot adjust their mortgage.  Mortgages are treated differently than other kinds of obligations.  Other kinds of obligations they get adjusted based on what the value of the property involved is and other factors.  But under current bankruptcy law mortgages really cannot be restructured at all in bankruptcy.  You can cure, you can make up missed payments but you can’t change the terms of the mortgage.  There’s been a lot of discussion about changing that rule and changing that rule as a way to help deal with the foreclosure mess.  To make it more possible for people to file for bankruptcy and to restructure their obligation pay what they can but probably not pay all of it in bankruptcy but that, every time that proposal has come up, it has hit political roadblocks.  And there really is not serious discussion of other major bankruptcy changes.  We had major reforms in bankruptcy in 2005, and I think the thinking is we’re not ready for another set of reforms.

Mohler: Well Professor Skeel you get right to the heart of what I think leads many people to scratch their heads and wonder in the current situation.  It would seem to at least an outsider looking in, that it would be to the advantage of the banks and mortgage holders to do exactly what you suggest they cannot or will not do, and that is renegotiate these mortgages when there is such a financial distress.  It would appear that that would at least keep their property as an income producing property rather than foreclosing it and ending up with these massive reservoirs of real estate that are now owned by mortgage lenders.

Skeel: I could not agree with you more.  That’s exactly the way I look at this situation.  So the question is why won’t banks re-negotiate?  There have been lots of discussion, there have been programs put in place both by the Bush administration and by the Obama administration to try to encourage banks to renegotiate.  Most have not.  The reason they don’t I think, there are a couple of reasons, one is they are afraid to recognize the true value of the property.  They would prefer to continue to pretend that the property that is subject to these mortgages is still worth the full amount of the mortgage and their afraid to change their balance sheets to admit that they’re going to take a loss on these mortgages.  That’s one reason they haven’t negotiated or re-negotiated.  Another I think is that they’ve been hoping for a government bailout.  That they were hoping that the Tarp Program that was put in place in 2008 would be used to buy mortgages and buy mortgage related financial instruments.  And so they’ve been hoping that conditions would get better or that the government would bail out these loans.  But I have felt from the beginning that the wisest thing to do would be to renegotiate these mortgages at least for people who are capable of paying some of what they owe to renegotiate them down to the values that make sense.

Mohler: You know the legal, historical, and even technical background of bankruptcy laws is really interesting.  It tells us a lot about how the law has responded to different challenges over time.  It also tells us something about how the American culture is set up over against the idea of debt and responsibility the entire economy of credit.  But I’m really interested to talk to Professor Skeel about the theological, spiritual, the specifically Christian understandings of bankruptcy law and the morality of debt.

Mohler: Professor Skeel is the author of the book Debts Dominion: A History of Bankruptcy Law in America also Icarus in the Boardroom.  He is an expert in his field as you now understand.  But he is also a Christian.  He is an elder at Tenth Presbyterian Church in Philadelphia.  And it’s to Professor Skeel now I want to turn to ask questions from a Christian, moral, and theological understanding related to these same issues.  How should a Christian think about bankruptcy, foreclosure, and the repayment of debts?  Professor Skeel let me ask you a direct question just at the most broad scale how should Christians think about bankruptcy as a moral issue?

Skeel: It’s hard to answer that question in a really simple way.  People tend to take the view either bankruptcy is never appropriate for Christians or it’s just inconceivable that it would be ok to file for bankruptcy.

Mohler: Well make the case for why someone would make that argument.  Why would bankruptcy be inconceivable?  I think I can anticipate this, but I want to hear you explain that.

Skeel: Well the argument that is usually made, it’s typically based on a passage in the Psalms.  Where the psalmist says the wicked borrows and does not repay.  And the idea is when you borrow money you’re making a promise.  And credit means trust is the root of the word credit and the idea is your creditor, your lender, trusts you to repay.  You are violating that promise when you don’t repay.  And certainly we have a promise keeping God.  Scripture is very clear about the importance of honoring our promises.  So the idea that bankruptcy would be a violation with that or inconsistent with it is not at all a silly idea.  I think there is scriptural support for that.  But I also believe that there’s scriptural support for forgiveness of debt.  Going back all the way into the Old Testament the idea of the jubilee that every fifty years debts would be forgiven.  And obviously the whole pattern in scripture of forgiving our sins, of God’s forgiveness of our sins in Christ, is often portrayed to us in terms of the forgiveness of debts.  Many of the examples Christ uses are examples of forgiving debt.  So I think there’s a real tension with bankruptcy where it’s essential that we keep our promises.  And when you borrow money you’re making a promise on the one hand but on the other hand there also is forgiveness when we are beyond hope or beyond help.

Mohler: Well I’m fascinated by the title of your book Debts Dominion because there’s a sense in which anyone who is indebted is under the dominion of the one who has leant the money.  So let me ask you a prior question, how should Christians think about borrowing money?  How should Christians think about debt in the first place?

Skeel: Well, I think that is the important question.  It’s even more important than the can you ever file for bankruptcy question.  And I think the short answer is that we should never borrow money that we can conceive of not being able to repay.  And obviously that means being very conservative about our borrowing habits.  I wouldn’t say it’s wrong to take a mortgage on a house.  My family took a mortgage on our house when we bought our house.  But I think there is a tendency for Christians and for all Americans to assume that the conditions that they see now are always going to hold true.  That things are never going to get worse, and I think it’s very important to consider the possibility that money you have now you might not have it in the future.  A job you have now you might not have in the future.  And simply be very conservative about what you borrow.

Mohler: So if we’re going to define terms here we would have to use something like net worth such that you could justify taking out a mortgage on a home if indeed the value of the home added to your other assets was such that you could liquidate the home and therefore liquidate the debt.

Skeel: Absolutely.  And one of the problems with the recent crises both from the side of the borrowers and from the side of the banks is that increasingly people borrowed money up to the full value of the home.  Now traditionally you would have never borrowed more than about 80% of the value of the home.  So you would be borrowing considerably less than the value of the home and that’s consistent with a net worth kind of approach.  That you shouldn’t take a mortgage that has no margin for error in it.  If the house declines in value or if anything happens, you won’t be able to repay it.  So, I think that’s definitely the starting point.

Mohler: I want to come back to that in just a moment.  But let me go back to the issue of debt.  And let me tell you from my perspective I find debt to be one of the most enslaving realities that I see in the lives of many Christians.  There are all kinds of folks out there that are doing good work advising Christians to stay away from debt.  And then I run into people such as the mother who recently came up to me and told me about her son who recently graduated from a very prestigious university with a baccalaureate degree in French literature and now has $85,000 in academic debt.  And I just had to hear her and realize that young man’s never going to get out from under that debt.  Not teaching whatever or doing whatever you can do with an undergraduate degree in French literature.  And then you look at the fact that a recent study indicated that a large number of young evangelical couples are living on about 109-115% of their annual income.  There’s just a huge problem here isn’t there?

Skeel: It’s a huge problem.  Each of these are problems the amount of debt that students take on.  My students at law school not infrequently have $200,000 in debt when they graduate.  It is a huge problem and a very difficult one because when you are a student there’s the tendency not to fully appreciate exactly what the significance of…you’re getting into on the one hand.  But on the other hand having an education is very important in our culture and in our society so it’s a very, very difficult issue.  We see it in other areas as well.  The other context which moves beyond students where people often run into debt problems is with their credit cards.  And with credit card usage one of the real problems with that in my view is that borrowing on a credit card is not the kind of face to face transactions that loans used to involve.  It used to be that if you borrowed money you went to your local bank and you talked to somebody across a desk, face to face.  So you knew who you were promising to repay.  With credit cards you’re doing that often all through the mail and people just don’t have as much of a sense of that being an obligation and something that they need to be very careful about.

Mohler: When you look at the question of debt given all that we discussed and the history of bankruptcy, and foreclosure, and all the rest putting it into a Christian worldview, a Christian moral framework, assuming that debt is to be avoided except for the situations in which it might be for the mortgage on our home that could be economically sustained and would be an act of economic integrity.  Let’s move to a period of distress.  Let’s move from assumptions about what would be normal under normal conditions and go to where many people right now are facing and have faced excruciating choices.  And it comes down to the fact that they thought they were borrowing money for a mortgage on a house they thought was worth say $200,000 and now it’s worth $110,000.  And it’s an underwater mortgage as they say.  So does this change the moral equation?

Skeel: Well I think the moral equation is the same but I think it may change the answer that you reach.  So the moral equation as I see it is that we have these two principles working together.  The one is that we should honor our promises and debt is a promise.  The other is that there is a role for forgiveness both spiritually and financially.  It seems to me with at least some people who end up with underwater mortgages where the real estate market has collapsed in the region they’re in, that handing over the keys to your house and stopping trying to pay a mortgage that is just impossible for you to pay maybe the right step to take.  So the moral equation is the same I believe as the equation when you first borrowed that money.  But the way it plays out is a little bit different.  And the reason that we have the laws that we have, and bankruptcy is a big part of this, is to deal with exactly those kinds of crises.

Mohler: This is where moral questions and legal and financial questions all of a sudden become matters of great urgency and you’ve kind of traced the issue for us in a way that is very understandable.  But let me tighten the vice just a little bit here.  We’re in a situation where we’re talking with people who will say, I want to do the right thing.  I owe more than I can possibly repay.  This is a situation that’s downright biblical in its implications.  But now you have someone  who says I simply don’t know what is right to do.  Now where would that kind of person, where would a Christian, in that kind of situation even turn to help?

Skeel: That’s a very hard question.  First thing I would say is you would turn to the leadership of your church.  And unfortunately these kind of economic issues have not always been issues that we within the church have handled well or have had expertise to deal with.  I think that these kind of issues are accountability issues of the sort we see in other aspects of our lives.  So if I were struggling in my marriage the first thing I would do is I would turn to my pastor or to leaders within my church.  I think it’s similar with respect to financial issues.  But I think people are even more leery of doing that.  Often one of the difficulties with a financial crisis is admitting to others that you are in difficult financial straits.  But I think talking about it within the church is the first thing you do.  Ideally, if your church leaders don’t themselves have economic expertise they will know people who do.  I know within our church we have a number of leaders who have economic expertise.  But I think that’s where you start to work these things out.  I mean I think this is a big part of what it means to be the church.

Mohler: Well trying to figure out these things can be very excruciating and especially when you’re under tremendous urgency felt by someone who may have lost income, lost a job, and is just trying to figure out how to land back on his or her feet here.  Let me ask you the question here when we were looking at a situation in which this kind of indebtedness has now become a crushing load, there is now no likely prospect of repaying.  And the Christian wants to do what is right in the situation.  Someone will come along and make the argument well it’s not a big a moral situation as you’re making it out to be.  Because this is just the way the game is played.  This is just the way the system works.  And Professor Skeel, because you are an expert in this field and because you are a very thoughtful Christian, I just want to ask you when you hear that kind of language that this is the way the game is played, this is the way the system works, how do you hear that?

Skeel: Well the first thing I hear as a Christian is whenever I hear people say this is just the way the game is played it makes alarms go off in my head.  The first question I ask is this, should Christians be looking at this as a game?  And accepting that this is the way the game is played and I think the answer is no.  I think the answer has to be there needs to be something different about us as Christians.  So simply saying well everybody does this is not a good reason to walk away from my debts.  It maybe that I need to walk away from my debts or I need to figure out alternative ways to paying them back but taking the view that everybody does this I think is exactly the wrong way to go about thinking through it.

Mohler: You can understand where that would come from as much as we immediately recoil in a sense of moral alarm, as you say we hear that kind of language.  When you see the media continually pointing to these, you know, in CEO positions and have taken on massive, not hundreds of thousands of dollars of debt, but hundreds of millions of dollars of debt and have walked away from it, you know there’s a sense that kind of gets trickled down through the economy and to the population saying maybe there are different rules for different people.

Skeel: Well I think that does trickle down, but I think the response to it ought to be should we be worried about what our CEO’s are doing not should I be able to do what they’re doing.  And we shouldn’t be defining bad behavior down to the rest of us.  I think we should be worrying about what the CEO’s are doing.  And what the CEO’s are doing and have done over the last decade has often been very troubling and it is especially troubling when the CEO’s themselves are professed Christians as many of them have been over the last decade.  But I agree with you completely that there is a tendency for that thinking to trickle down.  If they can walk away from what they owe well why can’t I as the little guy walk away from what I owe but certainly that’s not the kind of behavior the Bible calls us to.

Mohler: I think it’s reassuring to hear you say that, and I think it’s also important that we recognize that these kinds of ideas start to take on a certain cogency among Christians somewhat out of rationalization, somewhat out of desperation and that’s why we need to name them, and articulate them, and then describe them.  One final question for you Professor Skeel do most of the people in the fields of law and finance dealing with this question of debt and bankruptcy and all the rest.  Do they see this in a profoundly moral context?

Skeel: They do not.  Ordinarily bankruptcy and debt are seen in purely financial terms.  And the idea that there might be a moral dimension to how we think about debt really is it’s foreign and I hate to say the good old days were better but I do believe it’s the case that in the past the idea that we would be thinking about these issues morally was a much stronger part of American bankruptcy law so one of the things that I did for the book that you refer to Debt’s Dominion was read a lot of the history of American bankruptcy.  In the early 1900’s there was a very strong assumption that people wanted to repay what they owed and the bankruptcy system should be set up to make that possible to do whatever it can to help people repay what they owe.  We don’t have as much of a sense of that anymore, and my hope is that one of the silver linings of this terrible economic climate that we’re in one of the silver linings will be that we will start thinking in these kinds of terms as a culture more again.  I certainly hope that Christians will be leading that.

Mohler: Well, it certainly turns out that the issue of bankruptcy, the question of foreclosure, the larger economy of debt, is something that’s more than a theoretical concern for Christians.  We have a responsibility as disciples of the Lord Jesus Christ to be careful stewards of all that God gives us.  We’re also the people who are supposed to be very clear about our commitment to keep our promises.  How we figure all that out in a world like this with an economy like ours and with a bankruptcy set up like we now face, clearly this is where Christians are going to have to do some very hard thinking.

So why do we need to talk about bankruptcy?  Well it’s because right now in this economic moment there are an untold number of Christians among those who are deciding whether or not they walk away from indebtedness.  They walk away from homes and mortgages whether bankruptcy is an acceptable alternative.  There are Christian pastors, Christian leaders who are struggling with how to advise Christians who are in this kind of economic turmoil and stress and strain trying to figure out what to do.  How do we figure all these things out?  And to what degree is bankruptcy law a reflection of not only the culture but of our own personal commitments.  In his definitive book Debts Dominion: A History of Bankruptcy Law In America, Professor Skeel writes this, “bankruptcy law in the United States is unique in the world.  Perhaps most startling to outsiders is that individuals and businesses in the United States do not seem to view bankruptcy as the absolute last resort as an outcome to be avoided at all costs.  No one wants to wind up in bankruptcy of course but many U.S. debtors treat it as a means to another healthier end not as the end.”

I think that’s a very revealing statement.  And what I think Professor Skeel helps us to see, not only in this book, but in our conversation, is that many American Christians have bought into the idea of bankruptcy just as the natural course of doing business.  Corporations file for chapter eleven as a way of moving from one stage of their development to another.  They simply take this on as the larger business culture as what goes for normal if not normative in the larger economic world.  But Christians have a unique responsibility.  In the introduction to his book Professor Skeel writes, “We think that honest but unfortunate debtors are entitled to a fresh start.  But we also believe that debtors should repay their creditors if they can.  This tension and others like it has projected bankruptcy onto center stage in every generation of the nation’s history.”  Now I hope this conversation has revealed to us that we as Christians have probably thought inadequately about this.  We have given inadequate attention to matters of economic responsibility.  The first culprit here is not bankruptcy or foreclosure.  It’s not chapter this or chapter that.  The first issue here is debt and the fact is that the scripture is right when we know that the scripture says that those who are indebted become slaves to that debt.  Now Professor Skeel was keen in giving some good advice about what it means to take on no more debt than one is worth.  No more debt than one can actually repay.  Gone are the days of the 100% mortgages.  Gone are the days we would hope to think of the kind of free wheeling credit that was extended to everyone from teenagers to virtually everyone in the society over the last 20 or 30 years.  But we’ve come to understand something in this economic transition.  We’ve come to understand that the incredible temptation of available credit.  We’ve come to understand that we have a major problem if indeed many younger evangelical couples just to take one example are living between 105% and 120% of their annual income.  We understand that there is deep economic turmoil out there horrible economic pain.  Look at the unemployment statistics and we see the kinds of financial statistics that come in the economic pages well we know there’s great pain out there.  We know there are people whose mortgages are, when we’ve all learned a new language, underwater.  We come to understand that there are Christians as well as others who are struggling with how they maintain their own integrity, their reputation, their credit worthiness, and for that matter their economic lives as they deal with this kind of dislocation with this great recession and all that comes with it.  I hope this conversation with Professor Skeel has underlined the moral importance of the issues of our economic responsibility, the questions of bankruptcy and credit.  Once you take on credit, you take on an increased moral responsibility.  You take on a moral debt as well as a monetary debt.  Now the history of bankruptcy law in the United States as this conversation helped to reveal is a twist and turn story.  It’s about how creditors and debtors and government have worked together to try to figure out how to make an economy work.  But Christians can’t deal just with the law.  We have to understand we are held to a higher standard of judgment.  Professor Skeel was honest in saying that there are times when bankruptcy is indeed the only way out.  There are times in which we come to understand that there is a debt that people cannot pay.  Bankruptcy maybe the only available alternative but as he said we worship a promise keeping God.  We’ve been redeemed by a God who makes and keeps his promises and he expects his people to do the same.  Therefore we should make it the determination of our lives to find ourselves in no debt that we cannot repay.  You know as we are chastened by this conversation we recognize that debt’s a bigger issue than most of have taken into consideration.  Far too few churches are offering good pastoral advice on this and too seldom do we hear a good honest conversation about the issues of debt and bankruptcy.  If they’re front and center in the nation’s consciousness, as Professor Skeel says, they ought to be front and center in our conversation about Christian faithfulness as well.  But you know we can’t end this conversation just with the matter of monetary debt.  If we’re talking about finding ourselves in a position where we owe a debt we cannot repay well that takes us right into the gospel.  And that’s the reality why we address this issue differently than those who do not know the grace and mercy of Jesus Christ.  We are those who have found our debts, a debt we cannot pay, a debt of sin, paid in full by the Lord Jesus Christ.  That means that we are all debtors.  It puts it all in a new perspective and it leads to thinking,Hopefully to good sound gospel Christian thinking.

Mohler: Thanks for listening to Thinking in Public.  I hope you’ll go to my website at for a wealth of resources intended just for you.  I also hope you’ll write me and tell me about the issues you hope we’ll be talking about.  Write me at  I’m glad to receive any feedback.  I’d love to hear from you who are listening.  You’ll also find information about The Southern Baptist Theological Seminary at  For information about Boyce College go to  And let’s keep thinking.  I’ll meet you next time for Thinking in Public.