Spiritually Sound, But Many Churches Literally Bankrupt

Donation lifeline dries up as recession bites, forcing many into Chapter 11
By Clay Dillow,  Newser Staff
Posted Dec 23, 2008 12:16 PM CST
Though lenders have long seen churches as a good credit risk, many are now in trouble after borrowing during the housing bubble to expand their facilities.   (AP Photo)
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(Newser) – In trying times, many turn to the church to ease anxieties, but even houses of God haven’t been spared the wrath of recession, the Wall Street Journal reports. A church building boom begun in the 1990s has left many congregations overextended, and with the economic slowdown taking a sizable bite out of donations, many are turning to Chapter 11 bankruptcy.

Long considered good credit risks, carrying little or no debt and a reliable income, the nation’s 335,000 churches are facing foreclosures at rates lenders haven’t seen before. “There have been too many churches with a ‘build it and they will come’ attitude,” one lender said. “They had glory in their eyes that wasn’t backed up with adequate business plans and cash flow.”