First off, I’m not your spiritual adviser.
However, I would tell you that no, you do not need to confess your bankruptcy, because there’s nothing immoral or spiritually wrong with bankruptcy. That being said, it wouldn’t hurt to keep your bishop (or pastor, minister, llama, etc.) informed in case he can help. Bishops tend to be very helpful and sensitive, but bankruptcy is not a sin that you must confess.
Even its foundation is scriptural. Bankruptcy comes from the Year of Jubilee in the Old Testament. Specifically:
Deuteronomy 15: 1-4:
1 At the end of every seven years thou shalt make a release.
2 And this is the manner of the release: Every creditor that lendeth ought unto his neighbour shall release it; he shall not exact it of his neighbour, or of his brother; because it is called the LORD’S release.
3 Of a foreigner thou mayest exact it again: but that which is thine with thy brother thine hand shall release;
4 Save when there shall be no poor among you; for the LORD shall greatly bless thee in the land which the LORD thy God giveth thee for an inheritance to possess it:
(in other words, all debts are forgiven every 7 years).
So here in the U.S. we could have a chapter 7 every 7 years. Sounds pretty scriptural to me. Of course, since the 2005 amendments to the bankruptcy law, it has changed to a chapter 7 every 8 years, but in my mind I still think “7.”
Even Joseph Smith and Hyrum Smith were forced into it by some fairly nasty creditors. They filed their bankruptcy cases on April 18, 1842, with Joseph listing $78,066.38 in creditors. See Dallin H, Oaks and Joseph I. Bentley’s 1976 BYU Law Review article on “Joseph Smith and Legal Process: In the Wake of The Steamboat Nauvoo.”
This by no means demonstrates that bankruptcy is a wonderful thing that you want to shout from the rooftops, but it’s a safety valve, a release, that puts you back at zero. And after a $30,000 hospital bill or Dad being out of work for 6 months, zero is not that bad of a place to be.
This is not legal advice. If you need help, call 801-980-1313 or go to http://www.robertspaynelaw.com/.