WASHINGTON (BP) — The U.S. Senate approved by a nearly unanimous vote a bill blocking creditors from seizing money given to churches and charities by people who have filed for bankruptcy.
The Senate’s 99-1 vote, with only Sen. Herb Kohl, D.-Wis., dissenting, preceded by a day the May 14 approval of the same legislation by the U.S. House of Representatives Judiciary Committee. The House committee passed the bill without opposition.
The legislation is designed to counter a series of rulings ordering churches to surrender tithes contributed by members who later filed for bankruptcy.
The Religious Liberty and Charitable Donation Protection Act would amend federal law to:
— prohibit a federal bankruptcy judge from forcing a church or charity to return past gifts of as much as 15 percent of the bankrupt person’s gross income. It would protect a larger percentage if the debtor has demonstrated a pattern of contributing more than 15 percent.
— allow a person who has filed for Chapter 13 bankruptcy to include tax-exempt contributions of as much as 15 percent of gross income in a budget for debt repayment.
The law now permits a person who has filed for bankruptcy to budget moderately for entertainment, including gambling and alcohol, but increasingly courts have ruled a debtor may not budget money for a tithe to a church, because such giving does not provide a “reasonably equivalent value.”
“Under current law, a person can budget money for pizza and a movie but not for a charitable contribution to his or her church, even if that person believes his or her faith requires a tithe. Religious freedom should not be trampled upon by our federal courts,” said Sen. Charles Grassley, R.-Iowa, in a written statement.
Rep. Ron Packard, R.-Calif., said in a prepared statement after House committee approval, “Churches and charities should not be punished for accepting well-intentioned contributions. Without the help of Congress, virtually every offering plate in America remains at risk.”
Grassley and Packard are the chief sponsors of the legislation.
“It is encouraging to see a vote which reflects respect for religious liberty as well as an understanding and appreciation for the burden which has been placed upon churches in bankruptcy proceedings,” said Will Dodson, director of public policy for the Southern Baptist Ethics & Religious Liberty Commission, of the Senate action.
A growing number of churches have faced lawsuits by creditors and bankruptcy trustees since the Crystal Evangelical Free Church of Minneapolis was ordered by a state court in 1992 to return tithes from a couple in the church. The church has spent nearly $300,000 in defending itself, pastor Stephen Goold told a Senate subcommittee last fall.
In recent years, churches in states such as Colorado, Connecticut, Idaho, Kansas, Kentucky, Oregon, Pennsylvania and Texas have faced actions by federal bankruptcy trustees. These include at least three Southern Baptist churches, Cedar Bayou Baptist Church, Baytown, Texas; First Baptist Church, Klamath Falls, Ore.; and Midway Southern Baptist Church, Wichita, Kan.
