Q. In my country people can be put in jail for failing to pay debts. Is this sanctioned by Jewish tradition?
A. Jewish law on this delicate topic has gone through a number of changes, yet certain underlying principles have guided it throughout.
According to Torah law, if a creditor knows that a debtor is unable to pay a debt, it is forbidden to undertake any collection actions at all. The Torah states, “When you lend money to My people, to the needy among you, don’t be like a creditor to him”. (Exodus 22:24.) This is one of many Torah laws that protect the dignity of the debtor. Other such laws include the release from debts in the Sabbatical year (Deuteronomy 15:2), the prohibition on taking pledges by force (Deuteronomy 24:11) or from vital possessions (Exodus 22:25-26, Deuteronomy 24:17), and so on.
Over the course of many generations, certain leniencies were introduced into these laws. The basis for these leniencies was that being strict on the debtor ultimately worked to his advantage because the lender is more likely to extend credit when it is relatively easy for him to collect his debt. The justification for these changes was “Don’t lock the door on borrowers!” (1) - meaning: don’t do something that is going to prevent borrowers from receiving loans.
In some communities, the phenomenon of debtors refusing to pay became so widespread that the communities considered imposing imprisonment on delinquent debtors. Many leading authorities opposed this practice altogether; others sanctioned it reluctantly in cases where it was known that the debtor could pay but refused to do so, or in cases where the borrowers themselves asked to have this punishment imposed in order to enable them to obtain credit. The rabbis did not give their sanction to routine imprisonment of debtors where there was no evidence of ability to pay. (2)
We may ask: Why did the rabbis draw the line at this level of collection actions? Why doesn’t imprisonment also fall in the category of “Don’t lock the door on borrowers”?
There are basically two justifications:
One reason is that at some stage the ends just don’t justify the means. In ancient times creditors could enslave debtors (see II Kings 4:1), and no doubt this helped poor individuals to obtain credit. Yet slavery is so abhorrent that it does not justify the improved access to credit. (According to all opinions the creditor cannot compel the debtor to work off his debt.) (2)
But there is also another consideration. Improving access to credit is not automatically a good thing. Access to credit can be inadequate; then it is appropriate to make certain adjustments to improve it. Yet access to credit can also be excessive. In the last few years there has been an explosion in the amount of consumer credit; today, there is an unprecedented problem of debt addiction and lack of self-discipline and self-sufficiency. Our tradition encourages us to borrow to honor the Shabbat minimally and to provide Torah education to youngsters (3); it seems that borrowing for other reasons is not encouraged when there is no clear expectation of future income to pay back the loan. (4).
In the past, the main reason to limit sanctions against debtors was the Torah mandate to preserve the dignity of the borrower; against this Jewish communities weighed the poor person’s need for credit. Today this equation is more skewed than ever against draconian measures against debtors. While there is still a problem that some people face inadequate access to credit, it is also true that many poor families find credit too easy to obtain. Making collections more humane will make credit more difficult to obtain, but this itself will be an advantage to many families who struggle with poor fiscal discipline.
(1) Babylonian Talmud Bava Kamma 7b and elsewhere. (2) Tur and Shulchan Arukh, Choshen Mishpat 97 and commentaries. (3) Babylonian Talmud Beitza 15b. (4) See Ahavat Chesed II:24.