Debtor Of The Obligation To The Creditor example essay topic

Bankruptcy, today, is a very common thing among companies and individuals alike. Sadly enough there were as many bankruptcy cases filed in federal courts, as there were all other cases. The American bankruptcy law allows people to avoid paying their debts, by offering the debtors a discharge, which eliminates all their legal responsibilities. However, bankruptcy is a controversial issue amongst religious members of the Jewish population, for one must question whether it is morally correct to avoid paying a dept by filing for bankruptcy. According to the torah, a debt is an obligation that must be fulfilled. Consequently, if a bankruptcy discharge is invoked, under the strictness of Jewish law, one is still required to pay back the money no matter how long it may take him.

According to Bais Din the debtor must hand over his property, with a few exclusions, to the creditor, and if this does not cover what he owes the creditor, then every time the debtor acquires new assets, he pays the creditor until he no longer owes him anything. According to Halacha there is a way for the debtor to be discharged. This is through "Ye ush". This term denotes that this is the point where a person no longer believes he will recover the object he has lost. In this case, the creditor loses hope of being paid back the money the debtor owes him. Therefore the debtor is free from his obligation to pay the creditor.

According to some pos kim, does not discharge the debtor, unless the circumstances, such as where the debtors fields are ruined by a flood, the debtor is in, makes the creditor lose hope of ever being paid back According to others, can discharge the debt if the debtor becomes impoverished only and not because he didn't want to pay back his debt. If the debtor does not become discharged through the creditors, there is one of two ways to obtain a bankruptcy discharge through halakha. The first way is through liquidation. This is where the debtor hands over all his property, with keeping some exempt property, and this covers his debt to the creditors and he is now free of his obligation to pay them. The second way is through reorganization. The debtor makes a plan to repay his creditors over a number of years, with a minimum payment required for each year.

When he has finished with these payments, even though he may not have paid back the creditor in full, he is discharged. The discharge may be obtained without the consent of the debtor's creditors or through the debtors' creditors forcing him to choose one of those two options. A discharge of debt can be obtained through a majority of creditors, even if there are a minority are not in agreement with this. Halacha recognizes the fact that commercial transactions are in agreement with secular customs or agreements. This means that if both parties, when making the agreement, agreed that the debtor may file for a bankruptcy discharge, it is acceptable. There are two reasons that are connected to each other.

The first based on "Minhag Hasocharim", and the second based on the fact that the parties made their agreement based on secular law. The source for Minhag Hasocharim is based on the Mishka of Has ocher es HaPoalim (Bava Met zia 83 a): "One who hires laborers and tells them to come early or stay late: in a place where the custom is not to come early or stay late, the employer is not allowed to force them (to do so)... All (such terms) are governed by local custom". In fact min hag supersedes Halacha in this case. These local customs do not have to be established by halakha nor by a Jew.

Rather, they are the custom of the time and age. In many cases the secular law may have the same effect as a min hag, and may be used even if Dina D' Dina (explained below) doesn't apply. If business is done in the United States, there is a strong argument that that means that the parties automatically follow the secular laws and this means the bankruptcy discharge law is included. Secular law is also followed, if the parties use secular lawyers, therefore intending to follow secular law. Dina D' Dina, the law of the land is the law, implies that in monetary matters - matters that directly affect the government's financial interests, the secular law is fine to follow, except for in laws by secular Israeli government.

This implies that Jewish debtors can file for a bankruptcy discharge. In Misechta Gittin (Gittin 10 b) states "All documents accepted in non-Jewish courts, even if the witnesses who signed them are non-Jews, are valid, except writs of divorce and emancipation". Thus the purpose of a bankruptcy discharge, under secular law, must be explained in order to find if it falls under the category of dina d' dina. The first purpose is to offer cooperation to the debtor and creditor by forcing the debtor to surrender his property, which is then distributed equally to the creditors. The discharge also serves a social welfare purpose, by freeing the debtor of the obligation to the creditor, giving the debtor a new lease on life.

Therefore it can almost be rest assured that the debtor, who is now free of his debt, would not have to resort to immoral acts in order to ensure survival. As now the debtor is free, he can now become economically productive benefiting the national economy, so as to reduce the chances of the debtor being supported through government welfare programs. According to the Rema, the government obviously believes that providing a discharge is of great importance and therefore falls under dina d' dina. Minhag and dina d' dina do not apply equally in all situations. Assume a case where the debtor is entitled to a discharge only because there was a change in the law that happened after the parties signed their agreement. In such a case, the parties did not sign their agreement in compliance to secular law, however, according to dina d' dina, the debtor can be granted a discharge.

Another such case would be where an American citizen does business with a French creditor. The American citizen may obtain a bankruptcy discharge in America. Under dina d' dina the American government may not deprive the French creditor from claiming his money from the debtor. Nevertheless, min hang makes the discharge valid. In a workplace where there is a mixture of Jews, whether religious or not, and non-Jews, is it assumed that they are following secular law in doing business.

Therefore, the business may get a discharge through secular law, even though it may be in favor of the non-Jew. R' Moshe Feinstein holds that it is more important to follow dina d' dina in this instance for the reason of being involved with non-Jews. This is the case for business between a religious Jew and an irreligious Jew, for the fact that the irreligious Jew will take it for granted that their business is being done according to secular law. In a case of religious Jews, the debtor may get a discharge through secular law.

The creditor does have the chance to oppose that in Bais din, although the debtor will no doubt bring up dina d' dina. The defendant, the debtor, will assert that the halakha is in accordance with one aspect of the debate, this being called "kim li". Now the plaintiff, the creditor, can only win if he proves his case according to the view chosen by the defendant. In this case of a "kim li", basis din has to determine whether dina d' dina applies to a bankruptcy discharge. As mentioned above, the Rema states that it does, and therefore the defendant may win this case and be free of debt.

However, there is a question now as to whether the defendant should pay the creditor because of religious obligation. In a regular bankruptcy discharge, the debtor is free of all his debt and thus it may assumed in this case that the defendant is free from debt because of the use of "kim li". Working through secular law, unfortunately, may be the only way to clear debts owed between many. Although it is not the preferred way to do business, especially between religious Jews, it is the way the world works and it makes it easier to get rid of the debt between Jews and non-Jews. This paper is a very revised version of bankruptcy and the Halacha perspective, but I hope it provides all the information that is necessary..