Abstract
The ethical issues involved in bankruptcy affect the debtor, the creditor and the society in which they operate. Facing the debtor is his responsibility to pay back the loans and credit extended to him while the creditor has to decide whether or not to press his legal rights, irrespective of the consequences to the debtor. Society will have to determine to what extent, if any, it is prepared or obligated to fund the rehabilitation of the debtor and those employees, whose employment is terminated as a result of the bankruptcy. These issues will be determined according to the value structure of the particular souly in which debtor and creditor operate. This paper views the issues in a Jewish perspective. Debtors are considered to always be liable for their debts and there is a moral shame attached to bankruptcy, except in those cases where it is caused by natural disasters. While creditors are taught and encouraged to voluntarily waive their rights, this is considered charity with all its negative overtones. The courts are obligated to review the debtors assets and sell them, if necessary, to meet the creditors loans, leaving only basic necessities for minimal living of the debtor and his family. Society however, including the creditor, a part of the group, are obligated to fund the rehabilitation of the debtor either through its interest-free loan, charity or the provision of alternative employment. These may be funded out of communal taxes.
Similar content being viewed by others
References
Exodus 20:13–14; Exodus 22:1–15; Ex. 22:21–27; Lev. 25:14; Lev. 19–11; 19:13; 19:23; 19:25; 19:36; 22:3, Deut. 5:18; 19:14; 22:11; 25:13.
Exodus 23:10–1; Lev. 19:9–10; Lev. 25:1–43, Deut. 26:12.
Religion, Ethics and Economics, Fraser Institute, W. Block and I. Hexham eds, Fraser Institute Vancouver 1985.
Report of the Archbishop of Canterbury's Commission on Urban Priority Areas.
David Shochet, Jewish Law and Decision Making (Philadelphia, Temple University Press, 1979).
‘Company and Country Risk Models’, Journal of Banking and Finance, Vol. 8, No. 2, June 1984, Special Issue E.I. Altman.
Mishnah Torah, Mat'nat Aniyam, Chapter 7, Halacha 3.
Deut. 23:1–44.
Talmud Bavli, Pesachim 112A–113B.
Shulchan Aruch Choshen Mishpat, Hilchot Halva'ah, Section 96, Sub-Section 23–25.
Sepher HaChinuch Mitzvah 67.
Mishnah Torah Hilchot Malveh U'Laveh, Chapter 3, Halachot 5–6.
Ibid, Halacha 1.
Talmud Bavli Baba Metziah 30b.
Shulchan Aruch, Yoreh Deah, Section 248, Sub-Section 1.
Mishnah Torah Mat'nat Aniyam, Chapter 8, Halacha 13.
Author information
Authors and Affiliations
Additional information
Dr. Meir Tamari Formerly Senior Lecturer in Corporate Finance, Bar Illan University. Until recently Chief Economist of the office of the Governor of the Bank of Israel (Israel's Central Bank). Presently Director of the Institute for Ethics in Economics, Jerusalem. Author of With All Your Possessions; Jewish Ethics and Economics Life.
Rights and permissions
About this article
Cite this article
Tamari, M. Ethical issues in bankruptcy: A Jewish perspective. J Bus Ethics 9, 785–789 (1990). https://doi.org/10.1007/BF00383276
Issue Date:
DOI: https://doi.org/10.1007/BF00383276