Chapter 13 Bankruptcy Filers Can Tithe, Votes U.S. Congress
The U.S. House of Representatives voted “Yes” on a bill that protects a person’s rights to continue making reasonable charitable contributions, such as tithing, even while under consumer bankruptcy protection.
The bill was sponsored by Senator Barrack Obama (D-IL) and Senator Orrin Hatch (R-Utah). According to Hatch, “this bill clarifies the law so that those who tithe can continue to live their faith while in bankruptcy.
The Hatch-Obama bill, S. 4044, was drafted after a bankruptcy judge ruled that Chapter 13 filers could not tithe while still in the process of repaying their debts under bankruptcy protection. Under this new bill, all individuals regardless of income can continue to tithe to a religious organization or make charitable donations. To tithe is to give 10% of your income first before even paying bills.
A letter filed in September 2006 by Senator Hatch and Senator Charles Grassley (R-Iowa), and Jeff Sessions (R-Ala) after the New York bankruptcy ruling included the following statements:
· We would like to bring to your attention a bankruptcy case recently decided in New York, In re Diagostino, No. 06-10384, 2006 WL 2578172 (Bankr. N.D.N.Y. Aug. 28, 2006), which we believe inaccurately interprets how tithes are to be treated under the bankruptcy laws.
· We believe that this court decision was wrongly decided and runs counter to Congressional intent behind the Religious Liberty and Charitable Donation Protection Act of 1998 (PL 105-183) and the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (PL 109-8).
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· For people of faith in America, the obligation to tithe presents a significant part of the free exercise of religion, which is guaranteed to all Americans under the First Amendment. In fact, Congress has acted to protect the exercise of religion from encroachment by bankruptcy courts and trustees. Congress enacted the Religious Liberty and Charitable Donation Protection Act of 1998 to specifically protect tithing in the context of bankruptcy law.
Consequently, trustees may no longer demand that churches “refund” tithes to the bankruptcy courts.
· Similarly, debtors have a statutory right to include tithes in repayment plans under Section 4 of that law. In addition, nothing in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was intended to change this right to allow tithes in a bankruptcy repayment plan.
· We urge the Department to file court papers in appropriate cases to correct this misinterpretation, as well as issue mandatory guidance to Chapter 13 trustees so that they not object to reasonable charitable contributions in Chapter 13 repayment plans.
Religious Liberty and Charitable Donation Protection Act of 1998:
Amends Federal bankruptcy law with respect to avoidance by the trustee in bankruptcy of fraudulent transfers and obligations to cite circumstances under which a transfer of a charitable contribution to a qualified religious or charitable unit shall not be considered fraudulent. It also prohibits the trustee from avoiding such charitable contributions when acting as lien creditor and successor to certain creditors and purchasers.
S. 4044 has already been approved by the U.S. Senate and now needs to be signed by President Bush. The bill is also being called the Religious Liberty and Charitable Donation Clarification Act of 2006.
Sagaria Law, P.C. handles Chapter 13 bankruptcy, Chapter 11 bankruptcy, and Chapter 7 bankruptcy filings in Northern California. We have offices conveniently located in San Jose, Fremont, and Monterey. For a free consultation, contact Sagaria Law, P.C. today.
Congress Passes Obama-Hatch Tithing Bill, Allamericanpatriots.com, December 7, 2006
Religious Liberty and Charitable Donation Protection Act of 1998, Library of Congress
Senators: Tithing Allowed During Bankruptcy, Court Decision Wrong, Hatch.senate.gov, September 15, 2006
S.4044 (PDF)
Related Web Resources:
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), US Trustee Program
Tithing In Bankruptcy? Credit Cards Get First Claim Over Religious Obligations, Sun-sentinel.com, November 27, 2006
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