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The book of Proverbs gives serious warning about taking on a loan:

Just as the rich rule the poor, so the borrower is servant to the lender. —Proverbs 22:7 (NLT)

But it seems to focus much more attention on warnings about putting up a pledge for someone else's debt. The longest warning is in chapter 6:

1My son, if you have put up security for your neighbor,
if you have struck hands in pledge for another,
2if you have been trapped by what you said,
ensnared by the words of your mouth,
3then do this, my son, to free yourself,
since you have fallen into your neighbor’s hands:
Go and humble yourself;
press your plea with your neighbor!
4Allow no sleep to your eyes,
no slumber to your eyelids.
5Free yourself, like a gazelle from the hand of the hunter,
like a bird from the snare of the fowler. (NIV)

But there are a number of shorter saying about it as well:

Whoever puts up security for a stranger will surely suffer harm, but he who hates striking hands in pledge is secure. —11:15 (ESV)

A man lacking in judgment strikes hands in pledge and puts up security for his neighbor. —17:18

Be not one of those who give pledges, who put up security for debts. —22:26

Are we to take this emphasis as an indication that Proverbs is not as concerned about taking out a loan as it is of implicating yourself in someone else's loan? Or do these warnings against collateral contain an implicit condemnation of debt in general—a structure like, "just because your friend was dumb doesn't mean you should get involved in the stupidity"? Is there a subtle backhand in these collateral Proverbs against loans in general, or does that read too much into them?

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1 Answer 1

In view of the fact that it is impossible to establish anything but a barter or at best a simple cash economy without legal frameworks for credit that involve co-signers, collateral, liens, covenants and so forth, we must conclude that the advice given in Proverbs regarding loans and co-signing is intended as a recommendation for people who are not engaged in these activities as part of their normal business.

Chapter six starts with "My son", a hint that this is advice for a young man whose young friends might be taking risks or might otherwise not be credit worthy. The intent of the advice is probably to say that the bonds of "friendship" that young people form can blind them to the very real risks of the adult world. That is, it probably says more about the affect of friendship on a young person's judgement than it does about the morality or legality of credit.

Historically, the warnings in Proverbs regarding loans and co-signing were never interpreted as a basis for legal or moral restriction on credit, either from the side of the lenders or the borrowers. They were regarded as cautionary advice, and as an exhortation to financial independence and avoidance of risk, particularly for people who were not in the business of managing risk.

Providing loans to the needy was the basis of Israelite, and now Jewish charity from the start. Although these loans are free of interest, they generally require a co-signer or collateral. Co-signing these free loans is considered an act of charity on the level of providing the loan in the first place, but you do have to be careful, as the book of Proverbs says.

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