Bankruptcy and Transforming Grace

Bankrupt! The word has a dreadful ring to it. In fact, it is more than a word, it’s an expression. It means failure, insolvency, inability to pay one’s debts, perhaps financial ruin. Even in our lax and permissive society, being bankrupt still conveys some degree of disgrace and shame. Can you imagine a boy bragging to his buddies that his father has just declared bankruptcy?

In the moral realm, the word bankrupt has an even more disparaging connotation. To say a person is morally bankrupt is to say he or she is completely devoid of any decent moral qualities. It is like comparing that person to Adolph Hitler. It is just about the worst thing you can say about a person.

Now, you may have never thought of it this way, but you are bankrupt. I’m not referring to your financial condition or your moral qualities. You may be financially as solid as the Rock of Gibraltar and the most upstanding person in your community, but you are still bankrupt. So am I.

You and I and every person in the world are spiritually bankrupt. In fact, every person who has ever lived, except for Jesus Christ—regardless of his or her moral or religious state—has been spiritually bankrupt. Listen to this declaration of our bankruptcy from the pen of the apostle Paul:

There is no one righteous, not even one; there is no one who understands, no one who seeks God. All have turned away, they have together become worthless; there is no one who does good, not even one. – Romans 3:10-12

No one righteous, no one who seeks God, no one who does good, not even one. This is spiritual bankruptcy in its most absolute state. Usually in a bankrupt business, the company still has a few assets that can be sold to partially pay its debts. But we had no assets, nothing we could hand over to God as partial payment of our debt. Even “our righteous acts are like filthy rags” in His sight (Isaiah 64:6). We were spiritually destitute. We owed a debt we could not pay.

READ Chapter 1: Transforming Grace by Jerry Bridges

Then we learned salvation is a gift from God; it is entirely by grace through faith—not by works, so that no one can boast (see Romans 6:23; Ephesians 2:8-9). We renounced confidence in any supposed righteousness of our own and turned in faith to Jesus Christ alone for our salvation. In that act we essentially declared spiritual bankruptcy.

But what kind of bankruptcy did we declare? In the business world, financially troubled companies forced into bankruptcy have two options, popularly known as chapter 7 and chapter 11, after the respective chapters in the federal bankruptcy code. Chapter 11 deals with what we could call a temporary bankruptcy. This option is chosen by a basically healthy company that, given time, can work through its financial problems.

Chapter 7 is for a company that has reached the end of its financial rope. It is not only deeply in debt, it has no future as a viable business. It is forced to liquidate its assets and pay off its creditors, often by as little as ten cents on the dollar. The company is finished. It’s all over. The owners or investors lose everything they’ve put into the business. No one likes chapter 7 bankruptcy.

Temporary or Permanent Bankruptcy?

So what kind of bankruptcy did we declare? To use the business analogy, did we file under chapter 7 or chapter 11? Was it permanent or temporary? I suspect most of us would say we declared permanent bankruptcy. Having trusted in Jesus Christ alone for our salvation, we realized we could not add any measure of good works to what He has already done. We believe He completely paid our debt of sin and secured for us the gift of eternal life. There is nothing more we can do to earn our salvation, so using the business analogy, we would say we filed permanent bankruptcy.

However, I think most of us actually declared temporary bankruptcy. Having trusted in Christ alone for our salvation, we have subtly and unconsciously reverted to a works relationship with God in our Christian lives. We recognize that even our best efforts cannot get us to heaven, but we do think they earn God’s blessings in our daily lives.

After we become Christians we begin to put away our more obvious sins. We also start attending church, put money in the offering plate, and maybe join a small group Bible study. We see some positive change in our lifestyle, and we begin to feel pretty good about ourselves. We are now ready to emerge from bankruptcy and pay our own way in the Christian life.

Then the day comes when we fall on our face spiritually. We lapse back into an old sin, or we fail to do what we should have done. Because we think we are now on our own, paying our own way, we assume we have forfeited all blessings from God for some undetermined period of time. Our expectation of God’s blessing depends on how well we feel we are living the Christian life. We declared temporary bankruptcy to get into His kingdom, so now we think we can and must pay our own way with God. We were saved by grace, but we are living by performance.

If you think I am overstating the case, try this test. Think of a time recently when you really fell on your face spiritually. Then imagine that immediately afterward you encountered a terrific opportunity to share Christ with a non-Christian friend. Could you have done it with complete confidence in God’s help?

We are all legalistic by nature; that is, we innately think so much performance by us earns so much blessing from God. The apostle Peter thought this way. After listening to Jesus’ conversation with the rich young man, he said to Jesus, “We have left everything to follow you! What then will there be for us?” (Matthew 19:27). Peter had already added up his merit points, and he wanted to know how much reward they would buy.

Not only are we legalistic by nature, our Christian culture reinforces this attitude in us. We are exhorted to attend church regularly, have a daily quiet time, study our Bibles, pray, memorize Scripture, witness to our neighbors, and give to missions—all of which are important Christian activities. Though no one ever comes right out and says so, somehow the vague impression is created in our minds that we’d better do those things or God will not bless us.

Then we turn to the Bible and read that we are to work out our salvation, to pursue holiness, and to be diligent to add to our faith such virtues as goodness, knowledge, self-control, and love. In fact, we find the Bible filled with exhortations to do good works and pursue the disciplines of spiritual growth. Again, because we are legalistic by nature, we assume our performance in these areas earns God’s blessings in our lives.

I struggle with these legalistic tendencies even though I know better. Several years ago I was scheduled to speak at a large church on the West Coast. Arriving at the church about fifteen minutes before the Sunday morning service, I learned that one of the pastoral staff had died suddenly the day before. The staff and congregation were in a state of shock and grief.

Sizing up the situation, I realized the “challenge to discipleship” message I had prepared was totally inappropriate. The congregation needed comfort and encouragement, not challenge, that day. I knew I needed a totally new message, so I silently began to pray, asking God to bring to my mind a message suitable for the occasion. Then I began to add up my merits and demerits for the day:

Had I had a quiet time that morning? Had I entertained any lustful thoughts or told any half-truths? I had fallen into the performance trap.

I quickly recognized what I was doing, so I said, “Lord, I don’t know the answer to any of those questions, but none of them matters. I come to You today in the name of Jesus and, by His merit alone, ask for Your help.” A single verse of Scripture came to my mind and with it a brief outline for a message I knew would be appropriate. I went to the pulpit and literally prepared the message as I spoke. God did answer prayer.

Click to finish reading chapter 1 now.

Why did God answer my prayer? Was it because I had a quiet time that morning or fulfilled other spiritual disciplines? Was it because I hadn’t entertained any sinful thoughts that day? No, God answered my prayer for only one reason: Jesus Christ had already purchased that answer to prayer two thousand years ago on a Roman cross. God answered on the basis of His grace alone, not because of my merits or demerits.

One of the best kept secrets among Christians today is this: Jesus paid it all. I mean all. He not only purchased your forgiveness of sins and your ticket to heaven, He purchased every blessing and every answer to prayer you will ever receive. Every one of them—no exceptions.

Why is this such a well-kept secret? For one thing, we are afraid of this truth. We are afraid to tell even ourselves that we don’t have to work anymore, the work is all done. We are afraid that if we really believe this, we will slack off in our Christian duties. But the deeper core issue is that we don’t really believe we are still bankrupt. Having come into God’s kingdom by grace alone solely on the merit of Another, we’re now trying to pay our own way by our performance. We declared only temporary bankruptcy; we are now trying to live by good works rather than by grace.

The total Christian experience is often described in three distinct phases: justification, sanctification, and glorification…


You’ve been reading chapter one of Transforming Grace by Jerry Bridges. Get a copy of the new edition or keep reading chapter one here. Transforming Grace has sold over 300,000 copies and is one of Jerry’s modern classics. Other great books of his include The Pursuit of Holiness, The Blessing of Humility, and Respectable Sins. See all of Jerry’s great books and study guides here.

“The writings of Jerry Bridges are a gift to the church.” – Max Lucado

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