“The doctrine and practice of the early church was to owe no man anything. ‘Owe no man anything, but to love one another: for he that loveth another hath fulfilled the law.'”
— Calvin Elliott, Usury: A Scriptural, Ethical and Economic View (1902), quoting Romans 13:8
That verse has been quoted at millions of people sitting in church pews, wrestling with debt they can’t pay. It’s been used to make them feel like failures. Like sinners. Like bankruptcy would be a moral collapse.
So let me ask you something.
If the Church teaches that owing money is a moral failing — why has the Roman Catholic Diocese of Vermont been in Chapter 11 bankruptcy since fall 2024?
And why has it spent $2.1 million in legal fees while 119 abuse survivors wait to be compensated?
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I’ve been helping people deal with debt since 1994. I filed bankruptcy myself in 1990. And nothing frustrates me more than watching institutions use a legal tool for their own protection while telling individuals that same tool is shameful.
What’s Actually Happening in Vermont
Here are the facts, and they’re worth sitting with for a moment.
The Vermont Catholic Diocese filed for Chapter 11 reorganization after settling 67 previous abuse lawsuits for $34.5 million. That left the diocese with roughly $35 million in assets. Then 119 more claims came in.
So the diocese did what any rational organization does when the math doesn’t work: it filed bankruptcy.
I don’t blame them for filing. Bankruptcy is a legal right. It’s in the Constitution. I say this all the time.
What I do blame them for is the hypocrisy.
The Trust Shell Game
This is the part that should make you angry — not at bankruptcy, but at the double standard.
In 2006, the Vermont diocese restructured approximately $500 million in parish properties into separate trusts. These trusts were specifically designed to keep that property beyond the reach of creditors — meaning abuse survivors who might one day file claims.
A creditor advocate in the case called this strategy unprecedented among diocesan bankruptcies.
Think about that. The Church spent years strategically planning its asset protection — the exact kind of forward-thinking financial decision-making that bankruptcy attorneys help individuals do every day. Except when an individual does it, the Church calls it a moral failing.
What they tell you: “Bankruptcy is avoiding your obligations. You borrowed the money, you should pay it back. Romans 13:8 says ‘Owe no man anything.'”
What they do: File Chapter 11 to restructure $35 million in assets. Spend $2.1 million on lawyers. Shield $500 million in property through trusts set up years before filing. Use every legal protection available — the same protections they tell you are morally wrong to use.
The Judge Sees It Too
Bankruptcy Judge Heather Cooper has been watching the legal bills pile up while progress stalls. The diocese missed its January 2025 deadline to file a reorganization plan. Meanwhile, $842,262 went to the diocese’s own counsel (a Minnesota firm called Fredrikson & Byron), and another $1.3 million went to representatives for the abuse claimants and creditors.
Judge Cooper put it plainly:
“My concern is that I don’t want it all going to the professionals. I do think that the survivors probably would like to have something left over at the end of the day.”
— Judge Heather Cooper, U.S. Bankruptcy Court
She’s right. The professionals are consuming the estate while the people who were actually harmed wait.
This is not unique to church bankruptcies. I see the same thing happen when individuals get trapped in debt management plans that stretch out for five years while the “helpers” take their fees first. The math doesn’t lie — the longer the process takes, the more the professionals get paid, and the less is left for the people who need it.
43 Catholic Organizations and Counting
The Vermont diocese is not an outlier. As I’ve documented, at least 43 Catholic organizations have filed bankruptcy — dioceses, religious orders, parishes. They’ve used Chapter 11 to consolidate claims, negotiate settlements, and restructure their finances.
Every one of those organizations had access to attorneys, financial advisors, and strategic planners who helped them use bankruptcy law to their advantage.
And every one of those organizations belongs to an institution that tells you — the person with $30,000 in credit card debt who can’t sleep at night — that you should feel shame for considering the same legal protection.
Debt Is Math, Not Morality
I want to be clear about something: I’m not anti-Church. I’m anti-hypocrisy.
If bankruptcy is a legitimate legal tool — and it is, it’s in Article I of the Constitution — then it’s legitimate for everyone. Not just institutions with $500 million in property to protect. Not just corporations. Not just the people who can afford a Minnesota law firm.
It’s legitimate for you.
Here’s what the data actually shows: Federal Reserve research proves that people who file bankruptcy recover faster financially than those who don’t. Their credit scores rise. Their stress drops. They start saving again. The moral framing around bankruptcy is not based in scripture — it’s based in creditor marketing.
The Vermont diocese understood this. They looked at $35 million in assets, 119 claims, and a mountain of legal exposure, and they made a rational decision: file Chapter 11 and reorganize.
If you’re sitting in a pew this Sunday, drowning in debt, being told that your obligation to creditors is a spiritual matter — look at what your diocese did when the math stopped working for them.
They didn’t pray it away. They didn’t make a budget. They didn’t call a credit counseling agency.
They filed bankruptcy.
What This Means for You
If you’re carrying debt you can’t realistically repay, and you’ve been told — by anyone, including your faith community — that bankruptcy is morally wrong, I want you to consider three things:
- Bankruptcy is a constitutional right, not a character flaw. The Founders put it in the Constitution because they understood that people and organizations need a way to get a fresh start.
- The institution telling you it’s shameful uses it themselves. Forty-three Catholic organizations and counting. Plus countless other churches, nonprofits, and businesses run by people who would never question their right to legal protection.
- Every month you delay costs you money. Interest accrues. Retirement contributions get skipped. The real cost of a five-year debt management plan can be $400,000 or more in lost retirement growth. That’s not a moral victory — that’s a mathematical disaster.
The Bottom Line
The Vermont Catholic Diocese filed bankruptcy to protect itself. It shielded $500 million in property through trusts. It has spent $2.1 million on lawyers while 119 abuse survivors wait. None of that is morally wrong — bankruptcy is a legal right. But if it’s not morally wrong for an institution, it’s not morally wrong for you either. Debt is math, not morality. Make the decision that protects your future.
If you’re not sure where to start, take the two-minute bankruptcy quiz to see if the math favors a fresh start. Or use the Find Your Path tool to compare all your options based on your actual numbers — not someone else’s moral framework.
And if you need to talk to a bankruptcy attorney, NACBA (the National Association of Consumer Bankruptcy Attorneys) can connect you with one near you for a consultation.
The Church filed when the math was broken. You can too.
My advice is always just one input into your decision-making. Only you can decide what’s right for your situation. But I want you to have all the information — including the information that the people telling you bankruptcy is shameful are using it themselves.
If this helped you see things differently, send it to someone who needs to hear it.
Want more like this? My free newsletter, Your Money Actually, sends you the information the financial industry hopes you never see — the exposed hypocrisy, the hidden math, and the options nobody tells you about. No ads, no sponsors, just what I’d tell you if we were sitting at my kitchen table. Subscribe free here.
FAQ
Is it a sin to file bankruptcy?
No. Bankruptcy is a legal right established in Article I of the U.S. Constitution. While some religious leaders frame debt repayment as a moral obligation, the same institutions — including at least 43 Catholic organizations — have filed bankruptcy themselves when the math required it. The moral framing around personal bankruptcy is largely a creation of creditor marketing, not theology.
How many Catholic dioceses have filed bankruptcy?
At least 43 Catholic organizations have filed bankruptcy in the United States, including numerous dioceses across the country. Most have filed Chapter 11 reorganization to manage abuse-related claims and other financial obligations. The Vermont diocese is among the most recent, filing in fall 2024.
Does filing bankruptcy mean you are financially irresponsible?
No. Federal Reserve research shows that people who file bankruptcy recover faster financially than those who don’t. Bankruptcy is a strategic financial decision — the same decision corporations, churches, and nonprofits make every day. If the math is broken, bankruptcy fixes the math.
What is Chapter 11 bankruptcy?
Chapter 11 is a reorganization bankruptcy that allows an organization (or individual) to restructure debts while continuing to operate. The Vermont Catholic Diocese filed Chapter 11 to manage 119 abuse claims against approximately $35 million in remaining assets. Most individuals file Chapter 7 (liquidation) or Chapter 13 (repayment plan), which are faster and less expensive.
Can churches really file bankruptcy?
Yes. Churches, dioceses, nonprofits, and religious organizations file bankruptcy regularly. They use the same bankruptcy code, the same courts, and the same legal protections available to every American. The difference is that institutions rarely face moral judgment for using this legal tool — while individuals are often told it’s shameful.
Dealing With Debt? Understanding your options is the first step. See how all your debt relief options compare — including ones most sites won’t tell you about. The Find Your Path quiz gives a recommendation based on your actual numbers, and the Scam-O-Meter checks any company’s complaint history before you sign. Federal Reserve research shows bankruptcy filers recover faster than those who don’t file.
