Friday, February 08, 2013

Economic Life (13) Loans to the Poor

The level of help given to the poor depends on the seriousness of the situation. If the situation of the poor person is not too serious, then someone in their neighbourhood should lend them money to enable them to get back on their feet again. Loans to the poor have to critical conditions.

  1. A poor person must not be charged interest.
    If you lend money to one of my people among you who is needy, do not be like a moneylender; charge him no interest (Ex 22:25).
    Do not charge your brother interest, whether on money or food or anything else that may earn interest. You may charge a foreigner interest, but not a brother Israelite, so that the LORD your God may bless you in everything you put your hand to in the land you are entering to possess ( Deut 23:19-20).
    Interest is a killer for people, because if they fail pay to pay it, the interest is added to the principle with penalties. A small loan can turn into a huge debt in no time. Interest changes a loan from a blessing to a curse.

    An interest free loan may be enough to get some poor people going again. It gives them a strong incentive to work, so they can repay the loan. The ban on interest prevents their debt from growing unnecessarily, if life continues to be tough.
  2. Any loan to poor person that has not been repaid must be cancelled after seven years.
    At the end of every seven years you must cancel debts. This is how it is to be done: Every creditor shall cancel the loan he has made to his fellow Israelite. He shall not require payment from his fellow Israelite or brother, because the LORD's time for cancelling debts has been proclaimed (Deut 15:1-2).
    The aim of the loan is to help a poor person get back on their feet. If they fail to repay the loan, it must be wiped out after seven years. This means that the loan does not increase the burden being carried by the poor person, if they are unable to get on top of their problems.

    The reason for the seven-year limit is that we do not know the future. We should make commitments that we cannot meet. Any commitment beyond seven years is too risky, because we cannot know what our situation will be.

These loans are really a gift that must be repaid, if the person’s situation recovers. This is why Jesus told his followers to make loans without expecting to be repaid.
Give to the one who asks you, and do not turn away from the one who wants to borrow from you (Matt 5:42).
Jesus principle of generosity was a restatement of a command in Deuteronomy.
If there is a poor man among your brothers in any of the towns of the land that the LORD your God is giving you, do not be hard-hearted or tight-fisted toward your poor brother. Rather be open-handed and freely lend him whatever he needs. Be careful not to harbour this wicked thought: "The seventh year, the year for cancelling debts, is near," so that you do not show ill will toward your needy brother and give him nothing. He may then appeal to the LORD against you, and you will be found guilty of sin. Give generously to him and do so without a grudging heart; then because of this the LORD your God will bless you in all your work and in everything you put your hand to. There will always be poor people in the land. Therefore I command you to be open-handed toward your brothers and toward the poor and needy in your land (Deut 15:7-11).
If someone gets into financial difficulty, another person in their neighbourhood who is better off should give them a loan to help them through a difficult time. No particular person was responsible for making the loan, but those who were closest to the person in trouble would be expected to come forward. Given that the loan might not be repaid, it would not be surprising if people were reluctant to make a loan to a person in trouble, but this is not acceptable to God. He expects people to be generous. He says that generosity to neighbours is a condition for receiving God’s economic blessing. This makes sense. A community in which everybody is contributing will be stronger than one in which many of the people are struggling with poverty. Making a loan to someone who is poor, knowing that it might not be repaid back is an example of loving our neighbour.

Lenders have power over borrowers. This power can be used to intimidate the weaker person, but it divides the community undermining its strength. The Torah requires a lender to treat a vulnerable person with respect.
When you make a loan of any kind to your neighbour, do not go into his house to get what he is offering as a pledge. Stay outside and let the man to whom you are making the loan bring the pledge out to you (Deut 24:10-13).
The person with power must not enter the poor person’s house to create fear among his family or looking for valuables that could be claimed.

Efforts to help poor people must no harm to them This is why the loans was interest free and cancelled at the end of seven years, if the person was still poor. This is the opposite of the world’s way. Poor people have no security so they have to go to loan sharks, who charge very high interest rates, often up to fifty percent per month. The poor person usually fails to pay the interest, so it is added to the loan. In a very short time, the loan is enormous. The lender seizes all of the property of the poor person to cover the debt and they are left destitute. God’s way is different. Poor people must not be forced deeper into debt. If they cannot repay the loan, they are left no worse off than before they received it.

This full series can be found at Instructions for Economic Life.

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