Currently, bankruptcy is a common legal action in the United States. When church congregants start filing for bankruptcy, it can eventually affect a church as well. Churches run on donations and tithes from the congregation, and if the givers start to pull back to preserve their own finances, the church may be at a loss. Currently, a church in Richmond, Virginia known as the Richmond Christian Center filed for Chapter 11 bankruptcy protection.

This particular church listed assets at between $1,000,001 and $10 million and estimated liabilities of that same number according to documents that were filed late Tuesday with the U.S. Bankruptcy Court in Richmond. The Christian Center has been facilitating church meetings since 1983, and at one point the church was thriving with a very large and faithful congregation. Unfortunately, the church's lender started foreclosure proceedings on the building not long ago because of their failure to pay the mortgage. The massive building takes up an entire city block.

An auction was scheduled for Wednesday, and the bankruptcy filing was able to halt the auction and allow the church to keep their building. According to the Orlando Sentinel, many churches are starting to file for bankruptcy because they are unable to pay debts associated with their church. Some church staff can't make mortgage payments, whereas others may launch into construction projects assuming that the money will come from the faithful and generous congregation. If the congregation fails to donate the funds needed, churches can end up deeply in debt as a result.

In the past, churches hardly ever declared bankruptcy. Yet in 2011 alone, reports show that at least 100 American churches filed in court in order to get relief from their debts. The National Association of Church Business Administration says that churches are going through a very difficult time as a result of the recession and those bankruptcy filings are unusual.

Researchers claim that bankruptcy filings among churches are not normally the result of a church living beyond its means. Instead, it is normally the result of a congregation that has pulled back on their giving, making it impossible for a church to balance a budget correctly. Churches typically operate without large cash reserves because they are focused on giving their money away. This can be beneficial for missionaries or impoverished families supported by the church, but can become an issue for the church when financial emergencies arrive. Without large reserves to pull from, churches have no choice but to file for bankruptcy.

Some churches search for another means to cut their budget without having to file. This may mean laying off church staff that are typically paid for their services and cutting the amount of church-sponsored events that take place over the course of a year. Yet there is only so much that a church can do to reduce expenses and only a few ways that the church can make money. Often churches will make a last ditch effort to avoid bankruptcy by setting up a fundraiser of some sort.

Raffles, car washes, or banquets may be some ways that these churches will work to raise money. There was a point when churches could often go to the bank for a loan in a financial crisis, but that option is slowly disappearing as banks see churches as more of a financial risk than in previous years. If you are a pastor and are considering a Chapter 11 bankruptcy for your church, contact a local bankruptcy attorney to help you with your decision. The right lawyer can slowly work with you and explain the different steps in the Chapter 11 bankruptcy process.