Intentions matter in loaning funds

Recently, I’ve had a number of people ask a variant of the same question. At its core, the question has to do with whether it is morally acceptable to borrow money when one has no intention to repay the loan.

When phrased that way, the answer seems obvious, but as people consider their own facts and circumstances, they find it easy to rationalize. Somehow, their situation is different.

Let’s consider an example. As a result of the recession, an owner of several investment properties had seen the houses vacated by renters. The renters damaged the houses in the process of leaving, so they were in need of repairs before they could be rented again. The owner didn’t have the funds available to make the necessary repairs, so friends were advising her to use credit cards. In my book, this already raises a red flag. But even more important, they were suggesting that she then default on the credit card debt and negotiate a settlement for cents on the dollar.

There are two points that need to be made. First, while Scripture doesn’t describe the use of debt as sinful, it does describe its use in a cautionary manner (see Prv 22:7 and Hb 2:6-7 as examples). If the owner has to resort to using credit cards as the source of funding for making the necessary repairs, she is in over her head and needs to look for alternative solutions.

Second, it’s important to remember that when we borrow, we enter into an agreement with another party — the lender. While it’s one thing to enter into an agreement in good faith and then have circumstances change, it’s quite another to enter into an agreement with the intent to not fulfill your end of the deal.

I am concerned with the ease with which some people are willing to break promises they have made. The Catechism addresses this in a very cogent manner, and it’s worth sharing here:

“Promises must be kept and contracts strictly observed to the extent that the commitments made in them are morally just. A significant part of economic and social life depends on the honoring of contracts between physical or moral persons — commercial contracts of purchase or sale, rental or labor contracts. All contracts must be agreed to and executed in good faith” (No. 2410).

The Catechism continues: “Contracts are subject to commutative justice which regulates exchanges between persons and between institutions in accordance with strict respect for their rights. Commutative justice obliges strictly; it requires safeguarding property rights, paying debts, and fulfilling obligations freely contracted” (No. 2411).

Obviously, there is always a need for the ability to make adjustments to contracts as new circumstances dictate, but such adjustments should very much be the exception rather than the rule.

To the extent that people become accustomed to breaking promises and contracts, we can expect a breakdown in trust and the smooth functioning of society. And by living so close to the economic edge, whether it is government, businesses or individuals, we are creating an environment where the breaking of promises becomes too easily accepted.

God love you!

Phil Lenahan is the president of Veritas Financial Ministries ( and the author of “7 Steps to Becoming Financially Free” (OSV, $19.95). Submit questions for columns to