Bankruptcy

Bankruptcy is variously defined and understood, but for purposes of this article it is "the status of a debtor who has been declared by judicial process to be unable to pay his debts" (Encyclopedia Britannica, 120). It is different from insolvency, which refers to the person who is unable to meet her debts as they mature, but does not undergo legal procedures of dissolving the business.

Although evidence is almost nonexistent, it is fair to say that bankruptcy was exceedingly rare among Anabaptists and Mennonites until recent times. For early Anabaptists, property was closely related to mutual aid; hence if there was insolvency, the Mennonite community stepped in to assist (Klassen, 42 ff.). Mennonite doctrines and confessions of faith make no direct statements about on economic issues, including bankruptcy, because of the strong church and world dualism (separation from or nonconformity to political and economic activity). The spiritual leaders of Anabaptism, such as Menno Simons and Peter Riedemann, stress honesty, frugality, simplicity, mutuality, and sharing of profits, but do not refer to specific economic activity.

Hence an encounter with bankruptcy is a direct function of Mennonite entrance into the capitalist economic and political system, and is becoming an increasingly relevant concept with the passing of time (Kreider, 1980). The most extensive treatment has recently appeared in the periodical Marketplace, sponsored by Mennonite Economic Development Associates (MEDA), especially after 1980. Church periodicals are also dealing increasingly with the issue.

Although the evidence is weak, it is apparent that the rate of bankruptcy among Mennonite and Brethren in Christ members is alarmingly high, and includes agriculture as well as other types of businesses. This was accelerated by the economic stresses of the 1980s, especially the high cost of borrowing money (interest payment).

Mennonites have traditionally been very stringently opposed to declaring insolvency or bankruptcy. Sources of this are the tradition of nonswearing of oaths, interpreted to mean that a person's word is his bond, and that debts are always paid; the Mennonite disinclination toward becoming involved in economic activities of usury, merchandising for profit, risk taking, and competition; and the Mennonite "communalistic brotherhoods ethic," (Nelson, 133). Although pioneer sociologist Max Weber (1864-1920) assumed Mennonites were part of the capitalistic ethic, Troeltsch, Nelson, Tolles, Klassen, Vogt, and others emphasize more the mutual aid and brotherhood economics, which downplayed the risks of bankruptcy. Insolvency and bankruptcy would, in this context, have been interpreted as the results of a deviant economic practice, which on some occasions would result in church discipline or excommunication. Hence innumerable warnings have emanated from Mennonite spiritual leaders about the temptations of seeking wealth and the threat to spirituality and nonconformity (cf. Hershberger, 290).

In this view, insolvency and bankruptcy would result from attitudes and practices that are at odds with the traditional Mennonite understanding of the two kingdoms—the kingdom of God and the secular, selfish kingdom of the world. This understanding may be less characteristic of those members who are on the fringes of the community, and who are entering nontraditional economic activities where the temptations or needs of acquisition, risk taking, entrepreneurship are encouraged (Kreider). In this way the Anabaptist and Mennonite tradition, including related groups such as the Church of the Brethren and Friends, is different from the rest of the sectarian, Free Church, Puritan, and evangelical wing of Protestantism, which is more directly the result of the Lutheran or Reformed tradition and which stress individual effort and the idea of working in this world as part of God's calling.

Each bankruptcy is unique, and no general formula can be given; clearly, bankruptcy is the result of risk taking which is at the heart of the capitalistic entrepreneurial spirit. Not being able to predict future economic conditions is another major factor. Unusually difficult times for certain sectors of the economy also play a role. For Mennonites, another very significant factor is their recent entry into the business world, and the loss of community guidance and assistance which was available to the traditional family provider in the rural and village Mennonite society and economy.

Bibliography

"Bankruptcy." Encyclopedia Britannica, 14th ed. vol. 3. Chicago 1966.

Hershberger, Guy F.The Way of the Cross in Human Relations. Scottdale, PA: Herald Press, 1958.

Klassen, Peter J. The Economics of Anabaptism. The Hague: Mouton and Co., 1964.

Kreider, Carl. The Christian Entrepreneur. Scottdale, PA: Herald Press, 1980.

Loewen, Howard John, ed. One Lord, One Church, One Hope, One God: Mennonite Confessions of Faith, Text-Reader Series, 2. Elkhart, IN: Institute of Mennonite Studies, 1985.

Marketplace Winnipeg: Mennonite Economic Development Associates, published quarterly, 1971-.

Nelson, Benjamin. The Idea of Usury from Tribal Brotherhood to Universal Brotherhood. Chicago: University of Chicago Press, 1969.

Troeltsch, Ernst. The Social Teachings of the Christian Churches. German ed., 1911; English trans., 1931.

Vogt, Roy. "Economic Questions and the Mennonite Conscience," in Call to Faithfulness, ed., Henry Poettcker and Rudy A. Regehr. Winnipeg: CMBC, 1972.

Author(s)	Calvin W Redekop
Date Published	1987

Cite This Article

MLA style

Redekop, Calvin W. "Bankruptcy." Global Anabaptist Mennonite Encyclopedia Online. 1987. Web. 5 Dec 2024. https://gameo.org/index.php?title=Bankruptcy&oldid=122363.

APA style

Redekop, Calvin W. (1987). Bankruptcy. Global Anabaptist Mennonite Encyclopedia Online. Retrieved 5 December 2024, from https://gameo.org/index.php?title=Bankruptcy&oldid=122363.

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Adapted by permission of Herald Press, Harrisonburg, Virginia, from Mennonite Encyclopedia, Vol. 5, pp. 51-52. All rights reserved.

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