This is what Martin Luther had to say regarding the righteousness of Christ only covering us through imputation:
Christ has suffered for our sins and has fulfilled the law for us. We have only to believe in Him, and by believing in Him, take hold, as it were, of His merits and put them on like a cloak. If we do that, although imperfect and unholy, we shall be saved and considered just, not for anything that God made us, not for regeneration, or transformation, or sanctification, but for the righteousness of Christ, who in Himself was infinitely holy. All that man has to do is to remain passive; he must not attempt to do anything himself for his salvation. (Tischr. II. C. 15. &1)
Scripture alone, yes, Scripture alone says absolutely nothing of the sort. In fact, Scripture states just the opposite. In all of Scripture, you will never find any allusion to God externally covering His people with the righteousness of Christ as a cloak, rather you will see how He renews and recreates us internally, infusing His very Life into us.
Do you remember in Psalm 51:10 where David petitions God for Him to “create a clean heart within” and to “renew a right spirit within”? Was David asking for something absurd and outside of the power of Almighty God? If in reality, God can create man, forming male and female immaculately from dust, is it not in His almighty power to renew and recreate man interiorly, actually creating a clean heart and renewing a right spirit within, raising him from a state of spiritual death to one of divine life?
Saint Paul makes the most subtle yet compelling statements in his letters to the Ephesians and Galatians regarding how Christians are made anew. Take note of the emphasized phrases:
“For we are his workmanship, created in Christ Jesus for good works, which God prepared beforehand, that we should walk in them.” – Ephesians 2:10
“[A]nd to put on the new self, created after the likeness of God in true righteousness and holiness.” – Ephesians 4:24
“For neither circumcision counts for anything, nor uncircumcision, but a new creation.” – Galatians 6:15
Notice, under the inspiration of the Holy Spirit, Saint Paul says of those Baptized Christians that they were created in Christ Jesus, created after the likeness of God, and are a new creation! Surely we were all created at the moment of our conception, however, just as David longed for God to create a new heart within, God fulfilled this longing when we were created in Christ Jesus through Holy Baptism. And, as we know from the creation account of Genesis, what God says, God does! When we are validly baptized, God literally creates a clean heart within us and gives us a right spirit:
“[A]nd hope does not put us to shame, because God’s love has been poured into our hearts through the Holy Spirit who has been given to us.” – Romans 5:5
Not only has God’s love been poured into our hearts, creating it clean, but we have been given a right spirit within, the Holy Spirit Himself. Does the Holy Spirit reside outside of us, externally by our side, covering us with His righteousness like a cloak? What does Scripture say:
“You, however, are not in the flesh but in the Spirit, if in fact the Spirit of God dwells in you. Anyone who does not have the Spirit of Christ does not belong to him. But if Christ is in you, although the body is dead because of sin, the Spirit is life because of righteousness. If the Spirit of him who raised Jesus from the dead dwells in you, he who raised Christ Jesus from the dead will also give life to your mortal bodies through his Spirit who dwells in you.” – Romans 8:9-11
Does using the phrase “in you” four times seem too redundant? Not when Saint Paul wants to ensure that there is no room left for misinterpretation as to how we are given the Holy Spirit and where He dwells, that is “in you”!
“Though our outer self is wasting away, our inner self is being renewed day by day.” – 2 Corinthians 4:16
Notice that Saint Paul is reminding us that it is the interior and “inner self”, the heart and the spirit of the Christian that continues to be “renewed”, that is made new.
If anyone is familiar with the Gospels and the tension between Our Blessed Lord and the scribes and Pharisees, then one can surely be aware of the almost constant rebuking of the scribes and Pharisees by Jesus for their glaring hypocrisy. Our Lord even severely chided the scribes and Pharisees in public, declaring seven woes to them, calling them hypocrites six times in Matthew 23!
The definition of a hypocrite is this: “a feigning to be what one is not or to believe what one does not; especially: the false assumption of an appearance of virtue or religion”. Is not the doctrine of Imputation “to be what one is not”? When the doctrine of Imputation asserts that Christians are covered externally with the righteousness of Christ, but inwardly they “remain imperfect and unholy”, is that not a “false assumption of an appearance of virtue”?! Moreover, read what Jesus compared the scribes and Pharisees to regarding their utter hypocrisy:
“Woe to you, scribes and Pharisees, hypocrites! For you are like whitewashed tombs, which outwardly appear beautiful, but within are full of dead people’s bones and all uncleanness. So you also outwardly appear righteous to others, but within you are full of hypocrisy and lawlessness.” – Matthew 23:27-28
Notice the stark contrast between what “appears outwardly” and what in reality remains “inward”. The very hypocrisy Jesus condemns in the scribes and Pharisees, many Protestant Christians have adopted as a doctrine of imputed righteousness, that is a Christian appearing beautiful outwardly having the righteousness of God cover him or her while remaining inwardly “full of hypocrisy and lawlessness” and “full of dead people’s bones and all uncleanness”!
However, God cannot be mocked, and more importantly, He cannot declare something external in substance while inwardly something else exists! To attempt to strip the creative act from the declaration of the Word is an attempt to reduce the very nature of the Holy Trinity. God is pure act, He is never idle. Words without action are of men, not of God.
The very reason the Eternal Word of God became incarnate was to restore and renew man’s image and likeness of God by giving him a new heart and His Holy Spirit. Furthermore, Our Lord does not only want to restore us to what was lost and to recreate man in His image, but He desires to elevate us higher than that which we were initially created and to deify our entire being where we can partake in the divine nature of the Trinitarian Life (cf. 2 Pet. 1:4).
A sole declaration of righteousness will not get you into Heaven where nothing unclean will ever enter (cf. Rev. 21:27). No, you must be made clean; you must be regenerated; you must be renewed with a right spirit; you must be perfect as your Heavenly Father; you must be perfectly conformed to the image of Jesus Christ; you must be refined and purged from every effect of sin.
Do not be afraid to allow God to transform and transfigure your entire being into a new creation, giving Him access to your whole heart and entire will, prompting you towards a supernatural perfection through the power of His Holy Spirit where you can desire the very thing in which you were created for: union with God seeing Him face-to-face for all eternity!