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Whose to give?

Money | Reform law may bar Chapter 13 filers from tithing

Issue: "Red & blue all over," Sept. 23, 2006

Should it be legal to give away money that belongs to someone else?

That question, though not phrased in those words, is at the heart of an Aug. 28 ruling by U.S. Bankruptcy Judge Robert E. Littlefield. The judge ruled that a New York couple who had filed for Chapter 13 bankruptcy could not list charitable contributions as an expense, meaning they wouldn't be allowed to give to charity-including tithes to a church-while they were under bankruptcy protection.

The reason: Last year's bankruptcy reform law, Littlefield said, superceded the Religious Liberty and Charitable Donations Protection Act of 1998, which allowed those in bankruptcy to give to charities and churches. Debtors with incomes above the median would now have to pay their creditors first. "Until Congress amends [last year's law]," Littlefield ruled, "the court's hands are tied and the tithing principles that this court once applied . . . have been effectively mooted."

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The ruling alarmed Henry Sommer, president of the National Association of Consumer Bankruptcy Attorneys. He said the 2005 law infringes on the religious rights of churchgoers, and that it "didn't just reword the federal bankruptcy code, it also effectively rewrote Exodus and Deuteronomy." Congress, he argued, had used the separation of church and state "to engorge the profits of moneylenders at the expense of churches."

But others questioned the morality of giving away money while in bankruptcy. The money isn't really the debtor's to give away, they argued, and those in bankruptcy who tithe would essentially be forcing creditors to make the donations.

"I don't think God expects us to cheat our neighbors to accomplish His means," Mark Swan, a Salt Lake City attorney who represents creditors, told the Deseret Morning News. "It is somewhat hypocritical to tell someone you're going to stop paying them to pay God."

There is some question about whether other judges will interpret the law as Littlefield did, but bankruptcy attorneys said the ruling might embolden creditors across the country to try to block charitable donations of debtors in bankruptcy.

Balance Sheet

SAVING: The people of Los Alamos, N.M., have the best saving habits in the country, according to A.G. Edwards' second annual Nest Egg Index. The index rates the top-saving communities based on a dozen factors, including debt levels, participation in retirement plans, and home ownership. Bridgeport-Stamford-Norwalk, Conn., came in second, while San Jose, Calif.; Torrington, Conn.; and Minneapolis-St. Paul-Bloomington, Minn., rounded out the top five. The firm rated New Jersey as the top-saving state.

ENERGY: The price of oil fell sharply in early September, reaching a five-month low of $63.76 per barrel on Sept. 12. Oil prices had hit a high of $78.40 in July. Falling demand, a tame (so far) Atlantic hurricane season, and expectations that OPEC would keep supplies steady have accounted for the price drop. Gasoline prices are also falling, with AAA reporting a nationwide average price of $2.59 per gallon on Sept. 13, down from $3.00 one month earlier.

JOBS: U.S. companies ramped up their hiring this summer, according to a report last week from the Labor Department, with July marking the 10th straight month that the number of workers hired was greater than the number of workers leaving jobs. Hirings rose in July to 4.949 million from 4.899 million in June. The number of workers terminating employment also dropped to 4.447 million from 4.631 million in June.

Timothy Lamer
Timothy Lamer

Tim is managing editor of WORLD magazine.

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