The Jewish Ethicist: Bankruptcy
From aish.com by Rabbi Dr. Asher Meir, Business Ethics Center of Jerusalem
Q. Most advanced countries allow indebted people to erase their debts through personal bankruptcy. Is this ethical?
A. It’s impossible to relate to personal bankruptcy in a vacuum. We need to examine this law in the context of the overall relationship between borrowers and lenders. The general principle is that an appropriate balance is needed between the protections and obligations of each side.
We find in a wide variety of economic relationships that the Torah balances the rights and obligations of each side, yet also leans slightly in favor of the weaker party.