A reminder of Yom Kippur: the idea of ​​debt forgiveness dates back at least to the Bible


Hello and welcome to MarketWatch’s Extra Credit section, a weekly overview of the news through the lens of debt.

Over the past couple of years, the idea of ​​debt forgiveness – whether it’s student loans, medical bills, or rent debts – has grown from radical to relatively mainstream. But as many organizations touting widespread debt relief will tell you, it’s not a new and revolutionary concept. In fact, it dates back (at least) to the Old Testament of the Bible.

“Every seven years you will practice debt forgiveness,” we read in chapter 15 of Deuteronomy. “Such will be the nature of the remittance: any creditor will remit the due he claims to his colleague. ”

In the original Hebrew, the word for this debt forgiveness is Shmita, which literally translates to liberation. The concept appears elsewhere in the Torah – how the Jews refer to the Old Testament of the Bible – as instructions to farmers to give the land a break, to leave it fallow, every seven years. As part of the Shmita year, landowners were also expected to open their fields to their neighbors and the poor and slave owners were to free their slaves.

This week’s column seemed like a good time to dig into the origins and impact of Shmita because, according to the Jewish calendar, we are now at the start of a Shmita year.

Jews around the world marked the start of 5782 last week with Rosh Hashanah and on Thursday night the high holiday season will end with the end of Yom Kippur. The Shmita year lasts until this holiday takes place again next fall.

From utopia to practice

While today both the rich and the less well off use credit, in times and in the society where the Bible is established, loans were generally only used by the poor, said Benjamin Porat, director of the Institute for Research in Jewish Law at the Hebrew University of Jerusalem.

“A loan is a kind of mechanism for the rich to get richer at the expense of the poor,” Porat said.

Shmita was one of the few ways the Bible tries to correct this imbalance, Porat said. For example, the Torah prohibits lenders from charging interest.

“Shmita is part of a complex of ideas in the Bible that essentially promote a socio-economic view in which people have a second chance to start over in which they could change their economic and social position,” said Suzanne Last Stone, professor of Judaism. law at Cardozo Law School, Yeshiva University. “It’s kind of like an economic restart.”

“It’s kind of like an economic restart.”

– Suzanne Last Stone, Professor of Jewish Law at Cardozo Law School, Yeshiva University

The vision of society set out in the Bible is almost utopian, Stone and Porat said. But once the rabbis began to interpret the Bible and translate it into a code of law in the first century BCE, they developed an approach to Shmita that was less radical and more practical.

“There’s also the feeling that you can’t demand too much or that humans won’t be able to,” says Stone.

Indeed, the Jewish sages of the day observed that creditors were reluctant to lend to borrowers in the closing years of a Shmita cycle for fear that they would not get back the funds they lent. So the famous Jewish scholar Hillel came up with a workaround, called prozbul.

Creditors transferred their debts to the court until the end of the Shmita year, but since the obligation to write off debts under Shmita fell only on individuals, the court was not obliged to write off the loans. This has created “a legal fiction that allows the creditor to maintain and collect the debt over time,” Stone said.

Prozbol fits into the larger approach to the period, known as the Rabbinical Era, when the sages cared about helping the poor, but not necessarily transforming their situation as described in the Bible. Stone said.

“Debt cancellation is a kind of drastic way of treating the poor that allows the poor to truly achieve economic independence in the future,” Stone said. While “the charitable alms fund that the community manages in the rabbinical era essentially ensures the survival of the poor but does not require a level of charity that will allow them to dig from their own hole”.

The idea of Shmita remains influential in Israeli society

Although Shmita’s debt release portion was altered – and arguably watered down – during the rabbinical period, Porat said it still influenced some of our modern approaches to debt and credit.

“Bankruptcy was fashioned with a connection to this biblical idea,” Porat said. Bankruptcy “only happens to specific individuals in very specific circumstances, but the idea that at some point we release the person who cannot pay the debts and open the new page,” recalls the goals of Shmita, he said.

In modern Israeli society, the idea of ​​Shmita remains influential, Porat said, noting that people are aware that this year is a special year. Last cycle of Shmita, the concept inspired the efforts including a time bank where people donate their skills to those in need, a financial recovery program that has helped low-income families settle their debts, and more. Members of the Knesset, the Israeli parliament, invoked the concept by creating a plan to write off the debts of those in financial difficulty over the past year Shmita.

An ‘opportunity for a societal overhaul in terms of debt and money’

Outside of Israel, environmental and social justice organizations have also sought to implement Shmita’s lessons. Hazon, a sustainability-focused Jewish nonprofit, started Project Shmita in 2007, with the aim of raising awareness of this Jewish sabbatical tradition, said Sarah Zell Young, associate director of the organization’s national programs. In July, Hazon hosted a virtual summit for organizations to discuss ways they could learn from Shmita’s values ​​and they are highlighting and supporting Shmita-inspired projects across the country.

“This is an opportunity for a societal reset in terms of debt, money and the distribution of wealth,” Young said of Shmita. “And we want to bring him back into the conversation.”

At the Jewish Educational Loan Fund, a nonprofit that provides interest-free loans to low-income Jewish students to attend college or university, leaders are using the Shmita year as an opportunity to alleviate the debt of some of its borrowers.

The organization already has some experience with debt cancellation. Last year, a California foundation was looking for ways to write off debt and provided funding to JELF to relieve some of its borrowers, said Jenna Shulman, the organization’s chief executive.

“It was a life-changing experience for them and for us to be able to break the news to them,” she said. “There were crying and screaming and tears and it was really a shocking experience for me, I didn’t even know it would be like that.”

For its Shmita campaign, JELF hopes to raise $ 300,000 – including $ 150,000 in matching donations from two donors – for debt cancellation. Shulman said relief recipients must have adjusted gross income of less than $ 125,000 and a debt-to-income ratio of at least 35%. The organization hopes to seek relief requests by early 2022, Shulman said. The group plans to cancel the debt of at least 24 borrowers.

Shmita as control of society

For some activists, Shmita is not just a reminder of what individual organizations can do to create economic and environmental justice, but an opportunity to consider how to reshape society more broadly to achieve these goals.

“While the Bible recognizes that we live in a capitalist society, it also recognizes that if this capitalist society is not controlled, very bad things are going to happen,” said David Krantz, a doctoral student at Arizona State University and co-founder of Aytzim. , a Jewish environmental non-profit organization. “It needs to be checked and checked regularly. ”

Yet one-time debt relief is not enough to deliver the reset promised by Shmita, he said.

“Yes, we need to get out of debt, but we also need to think about why people are getting so much debt and what we can do differently in society to help manage this,” he said.

Debt “jubilees” also come from the Bible

The Debt Collective, an organization rooted in Occupy Wall Street, has been pushing for years for debtors, creditors, government officials and others to rethink the role of debt in our society with a nod to the concept Biblical Jubilee, a period of debt forgiveness that occurs every seven cycles of Shmita, or once every 50 years.

In 2012, the organization launched the Rolling Jubilee, an initiative to buy out and cancel medical debt, later expanding the concept to for-profit college student debt. Earlier this year, the Debt Collective launched Biden’s 100th anniversary, a campaign to push President Joe Biden to write off all unpaid student debt.

When the group decided to use the term for the first time, some organizers wondered if it would have a general resonance, said Thomas Gokey, organizer of the Debt Collective.

“Does anyone even know what the Jubilee is?” is a question Gokey said he remembers discussing with the organizers. “Would we lose people, or would it be luck for people if they maybe haven’t encountered that term before they learn something?” “

In the course of its work, the organization reflects not only on the cancellation of financial debts, but also on how the company can be reshaped beyond a single jubilee. In the case of student debt, that means revamping the system so that the next generation does not face similar challenges, Gokey said, but the changes they envision are broader and may involve the creation of different types of debt. debts or obligations. For example, assuming the obligation to provide everyone with health care or pay reparations for slavery, he said.

“The big question we want to ask everyone is what debts we really owe each other,” Gokey said. “Not what debt your credit card company says you owe. What are your real obligations to people? “


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