Facing a dramatic decline in its property values, The Church at South Las Vegas stopped paying its mortgage in May and filed for Chapter 11 protection in July after its lender filed suit. The church owes approximately $7.6 million on property now worth only $2.4 million.
Pastor Benny Perez told media that the default was a strategic move in order to preserve member donations—totaling almost $650,000 according to court filings—given to expand church facilities. The church has the money to make its monthly payments (it has about $1 million in reserve funds) but believes it is bad stewardship to have tithes keep going into a "black hole."
"People give to vision," Perez told CBS 8 News. "They don't give to debt."
But others doubt the wisdom of a church taking such action.
Although bankruptcy can be a tool to more effectively allocate resources, the president of the Association of Christian Economists thinks churches need to remember the way their actions affect others.
"It does strike me that there is a witness in a church doing everything it can to meet its obligations," said John Lunn, an economics professor at Hope College. "That doesn't mean you can never file bankruptcy. But as Christians, we have an obligation to behave better than the law."
Indications are that many have fallen short. Pointing to 200 church foreclosures over the past three years—compared to virtually none from 1996 to 2006—Maryland-based business consultant Mike Metzger said too many Christians talk in religious clichés instead of facing reality.
"A lot of faith communities are like homes," said Metzger. "They have balloon payments, and when due they either beg, pass the plate, lay off staff, or file bankruptcy."
Experts disagree ...