Bankruptcy law forbids tithing, charitable donations

A quirk in the new bankruptcy law could keep filers from tithing to their churches or making any charitable donations, for that matter.

The change in the updated bankruptcy law has led a New York judge to reluctantly decide that debtors who make above the state’s median income cannot donate to charities or tithe to a church until they’ve paid back their creditors.

The ruling could affect Americans who follow a religion and end up filing bankruptcy.

According to the 2004 General Social Survey conducted by the National Opinion Research Center, 86 percent of Americans are religious, and two-thirds of those who belong to a congregation "actively participate."

The ruling in the New York case is that debtors Frank and Patricia Diagostino cannot tithe to their church until their creditors are paid. The couple will have to wait five years, until they finish paying their creditors, before they can continue a tradition they have honored for years.

"We’re not talking about sporadic giving here," says the couple’s consumer bankruptcy attorney, Jerry C. Leek. "This was a part of their life. They were tithers to their Catholic church for 20 years, and they wanted to continue that practice."

The decision didn’t just upset debtors; it also startled the congressional leaders who championed the revisions in the bankruptcy code.

"Sen. Orrin Hatch was very surprised by how the bankruptcy court in New York interpreted the law," says Peter Carr, spokesman for Sen. Hatch, R-Utah.

He is not alone. Hatch, along with Sen. Chuck Grassley, R-Iowa, and Sen. Jeffrey Sessions, R-Ala., all sponsors of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, have problems with the decision.

Read the rest of the news article at bankrate.com

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