DEBT

Notes from Larry Burkett's booklet Financial Freedom, Including Debt and Bankruptcy.

What is debt?

Most simply put, a debt is something that is owed.  The Bible does not prohibit a person from borrowing, but it does warn against surety, or the taking on of a debt without an absolutely sure way to repay it.

Therefore, we use the definition of debt as "a condition that exists when a loan commitment is not met, or inadequate collateral is pledged to unconditionally satisfy a loan agreement."

Debt exists when any of the following conditions are true:

·         Payment is past due for money, goods, or services that have been purchased.

·         The total value of unsecured liabilities exceeds total assets.  In other words, if you had to cash out at any time, there would be a negative balance on your account.

·         Anxiety is produced over financial responsibility, and the family's basic needs are not met because of past or present buying practices.

Although the terms debt and credit are often used interchangeably in our society, they are definitely not the same. Credit is "the establishment of a mutual trust relationship between a lender and a borrower (or potential borrower)."

The scriptural definition of a debt is the inability to meet agreed-upon obligations. When a person buys something on credit, that is not necessarily a debt; it is a contract. But when the terms of that contract are violated, scriptural debt occurs.