Americans are more generous than any other nation. In 2009 alone, charitable contributions were estimated at $ 300 billion. No other country even came close. Per capita, we give 3 ½ times more than the French, 7 times more than the Germans and 14 times more than the Italians.So who are all of these big givers in the US? You would think that most of the big donations come from big corporations, but you would be wrong. Individuals make up over 75% of the charitable giving.
Another surprise is that the poorest 20% of our population donates a higher percentage of their income than the richest 20%. It also made little difference how the overall economy was doing. Charitable giving among individuals has been very steady in good times and bad.
Because very few itemize their deductions, most who give in the US do so for reasons other than getting a tax break. Most give for spiritual or religious reasons. That is why churches and other houses of worship are the largest recipient of charitable giving.
This intro to charitable giving leads to a very important question: Can you still give to your church even if you need to file for bankruptcy protection?
Bankruptcy laws now allow a debtor to make charitable donations and a charity to keep donated gifts. In the means test calculation, a Chapter 7 debtor can specify the portion of their income that they regularly give to charity. Just be prepared to show proof and a long track record.
Similar protection is given to a Chapter 13 debtor. Because bankruptcy courts were not allowing Chapter 13 debtors to tithe or make other charitable donations until all credit card debt was paid off, Congress passed the Religious Liberty and Charitable Donation Clarification Act of 2006. Today, as long as the donations are not a deliberate attempt to avoid your creditors, a Chapter 13 debtor can continue making donations.
Here is the bottom line: It has to pass the smell test. If you haven’t darkened the door of a church until the day before you file your bankruptcy case, be prepared for the trustee to contest your last minute charitable intent. If you’re a regular church giver, however, you should be able to continue your charitable support despite having to file for bankruptcy protection.
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