Senators Orrin Hatch and Barack Obama have recently proposed legislation that would allow individuals in bankruptcy to continue tithing and giving to charities.

Tithing is a scripture-based practice followed by many Christian groups. It means giving a portion of your income, usually 10-15%, to support one's local church. Tithes are usually donated before any personal bills or expenses are paid by the giving person.

In a recent New York case, a bankruptcy judge ruled that debtors can't tithe or donate money to charity if they want the federal protection of a Chapter 13 bankruptcy. The New York bankruptcy judge ruled that because of the recent changes to the bankruptcy code, the $100 a week a New York couple wanted to give to their local church had to be used to pay creditors.

Before the new bankruptcy law went into effect in October, 2005, bankruptcy court judges generally permitted chapter 7&13 filers to tithe a portion of their income each month. In 1998, the passing of the Religious Liberty and Charitable Donation Protection Act allowed debtors filing for bankruptcy to exempt up to 15 percent of their annual income from creditors for tithing or charitable donations.  However, this law was unfortunately wiped out by the October, 2005 law changes. 

Now, Senators Obama and Hatch would like to see similar law reinstated.  I for one agree with them. With all the poverty in our country and people still living in squalor from the devastation of Hurricane Katrina, the last thing Congress needs to do is stifle charitable giving by the American public.  This includes people in bankruptcy.

The bill has already passed in the Senate and has now been referred to the House.  Hopefully Congress and the President do the right thing and pass the bill.

-- Attorney Andrew Partridge
   BankruptcyHQ.com

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