Bankruptcy Law Says Thou Shalt Not Tithe

By Michelle Singletary
Sunday, November 19, 2006

It took me a while before I had faith enough to tithe.

Tithing means giving a tenth of your income. For many who believe in tithing, it means giving that 10 percent first -- before any bills are paid.

Tithing is a practice based on scripture followed by many Christian groups, and the money is used to support the local church. The practice of charitable giving varies among religious denominations. So does the monetary amount or percentage of income members are encouraged to donate.

If my grandmother, Big Mama, were still alive she wouldn't approve of my decision to tithe. Although my grandmother, who raised me, faithfully took me and my brothers and sisters to church, she gave just a few dollars during the service.

And whenever the minister would talk about tithing or the need for congregants to increase their giving, Big Mama would whisper under her breath that the reverend should be happy with whatever she gave.

It wasn't that my grandmother wasn't a generous woman. It's that she feared that giving more to the church would leave less for bills. Paying her debts came first for Big Mama.

But many people who believe in the biblical requirement to tithe struggle with this question: Should I give even if I'm deeply in debt?

In a New York case, a judge ruled that some debtors can't tithe or donate money to charity if they want federal bankruptcy protection. U.S. Bankruptcy Judge Robert E. Littlefield Jr. ruled in August that because of the recent overhaul of the bankruptcy code, the $100 a week a couple wanted to give to their local church had to be used to pay creditors.

Under the new bankruptcy rules, which went into effect a year ago, debtors who file for bankruptcy must undergo a means test. Those whose annual incomes are below a certain amount based on their state's median income are permitted to file for Chapter 7, which for the most part wipes out non-secured debt.

However, individuals or couples who make too much money based on the means test must file under Chapter 13, which requires debtors to repay their debts over a three- to five-year period. In a Chapter 13 filing, only certain "reasonable" expenses are allowed. What's left after those expenses are determined must be used to repay creditors.

Before the new law went into effect, bankruptcy court judges were required to permit debtors to tithe a portion of their income on a regular basis. Specifically, the Religious Liberty and Charitable Donation Protection Act of 1998 allowed debtors filing for bankruptcy protection to exempt up to 15 percent of their annual income from creditors for tithing or charitable donations.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 trumped that law, at least for Chapter 13 filers, Littlefield ruled. It's yet another major problem with the flawed law.

"Thou shalt have no gods before me . . . except for MasterCard, Visa and American Express," said Henry J. Sommer, president of the National Association of Consumer Bankruptcy Attorneys, which criticized the judge's decision and the bankruptcy reform.

Sommer said in a release after Littlefield's decision: "For religious Americans who find themselves deeply in debt due to job loss, catastrophic medical expenses or other circumstances, the 2005 reform legislation didn't just reword the federal bankruptcy code, it also effectively rewrote Exodus and Deuteronomy. Many who practice their faith and believe that they are bound by creed to tithe a portion of their income will find that Congress effectively decided that what credit cards want is more important than the deeply personal religious practices of Americans."

Littlefield's decision prompted Sens. Orrin G. Hatch (R-Utah) and Barack Obama (D-Ill.) to propose legislation that would allow individuals in bankruptcy to continue giving to churches and charities.

Obama, who voted against the 2005 bankruptcy legislation, said the bill would clarify that Congress didn't intend for the law to prioritize creditors over religious institutions and charities. The bill passed in the Senate and has been referred to the House.

"For millions of Americans, charitable giving and tithing is an essential part of their lives," Obama said in a statement. "And in a country where 37 million citizens live in poverty, we should be encouraging charitable giving, not limiting it."

I certainly hope the House follows the Senate's lead. Even the judge in the New York case thinks the bankruptcy reform law is flawed. Littlefield wrote in his decision: "The court does not agree with this awkward, bifurcated congressional framework which makes charitable giving easier for some debtors and not others. Whether tithing is or is not reasonable for a debtor in bankruptcy is for Washington to decide. However, consistency and logic would demand the same treatment of all debtors."

Is tithing or charitable giving reasonable if you are in debt? For many it is. It's not a matter of choice. It's a matter of faith.

But there's another biblical principle that these same religious folks should heed. Psalm 37:21 says, "The wicked borrows and does not repay." Just as you are called to render your tithes or charitable contributions, so too should you make every reasonable attempt to honor your debts.

· On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online athttp://www.npr.org.

· By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

· By e-mail:singletarym@washpost.com.

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