[Avodah] Bankruptcy and Halacha (was The Sacrd Shekel)

[Prof. L. Levine]

Zev Sero wrote;

On 20/3/23 16:58, Prof. L. Levine wrote:
> The second element of American Bankruptcy is ?fresh start,? which makes
> it unnecessary to make payments (?discharge?) beyond those prescribed by
> the bankruptcy court.? Talmudic Halacha does not recognize fresh start.
> If someone originally lacks funds but acquires them later, he must pay
> past debts using new assets.

Read the rest of the article.   Talmudic halacha is not necessarily the
operative law in this case.  Dina Demalchusa is likely operative, and if
so it is arguably (and I would so argue) not even midas chassidus to pay
the discharged debts, unless there was a clear understanding between the
parties that they would follow Dinei Yisrael and not Dina Demalchusa.

WADR I suggest your read the article at

https://www.jlaw.com/Articles/bankruptcy.html

Bankruptcy - A Viable Halachic Option?
INTRODUCTION

American bankruptcy law offers people the opportunity to avoid repaying their debts, even if they later become wealthy. This is accomplished by granting debtors a "discharge" of their debt, which permanently eliminates their legal responsibility to pay. Debtors are increasingly seizing this opportunity. In calendar year 1991, almost a million bankruptcy petitions were filed in the United States alone.


Obtaining a bankruptcy discharge raises serious halachic problems. First, halacha requires repayment of debt. Second, halacha generally prohibits litigation between Jews in secular courts. This Article explores whether, despite these obstacles, Jewish debtors may take advantage of a bankruptcy discharge.


PART I: HALACHIC IMPORTANCE OF PAYING ONE'S DEBT

Halacha considers the repayment of debt to Jewish creditors as a moral and religious imperative. Most authorities agree that the payment of one's debts is an affirmative biblical commandment.3<https://www.jlaw.com/Articles/bankruptcy.html#Note_3> Rabbi Yisroel Meir HaCohen (the "Chafetz Chaim")4<https://www.jlaw.com/Articles/bankruptcy.html#Note_4> states that if a debtor who can pay refuses to do so, he also violates a negative biblical commandment not to oppress ("lo sa'ashok") his neighbor.5<https://www.jlaw.com/Articles/bankruptcy.html#Note_5>


The Mishna declares someone in any of four categories is called an Evildoer ("Rasha").6<https://www.jlaw.com/Articles/bankruptcy.html#Note_6> Quoting David HaMelech,7<https://www.jlaw.com/Articles/bankruptcy.html#Note_7> it says that one of these is a person who borrows but, although financially able, does not repay. To such persons the sages apply the verse "[t]hose who acquire wealth in violation of halacha, in mid-life it(they) will leave them(it)" (Emphasis added). The phrase "it(they) will leave them(it)" has two meanings. Sometimes the wealth ("it") leaves the people ("them") - i.e., the people become impoverished while still young. In other instances, the people ("they") leave the wealth ("it") - by dying prematurely.8<https://www.jlaw.com/Articles/bankruptcy.html#Note_8>


There is no halachic equivalent to a bankruptcy discharge.9<https://www.jlaw.com/Articles/bankruptcy.html#Note_9> Instead, if property collected from a debtor is not sufficiently valuable to pay off his debts, the debtor remains personally liable for any unpaid amounts. If and when the debtor acquires additional assets, he is obligated to pay, and this obligation is enforceable by rabbinic court ("bais din").


Professor Yitzchok Levine




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