Is Church Tithing Allowed in Bankruptcy?

31 Oct Is Church Tithing Allowed in Bankruptcy?

Sections 707(b)(2) and 1325(b) of the bankruptcy code allow a chapter 7 or chapter 13 debtor to claim an expense for charitable contributions, including tithing to a religious organization. This has the possible effect of allowing a debtor to qualify more easily for chapter 7, or allowing a chapter 13 debtor to pay less money into his or her chapter 13 plan.

But what amount should the debtor list a monthly tithing expense? Should the amount be what the debtor has been paying prior to filing the bankruptcy, or should it be what the debtor will pay after filing the bankruptcy?

The answer, under sections 707(b)(2) and 1325(b), is that the tithing expense ought to consist of what the debtor will pay in the future. This will usually be a larger figure than what the debtor had paid just prior to filing bankruptcy, when he or she may have been under significant pressure to pay creditors.

Schedules I and J, the debtor’s monthly budget forms, instruct that both income and expenses should listed as they are expected to occur now and in the immediate future.

Section 707(b)(2) states that no one can object to the debtor having made or continuing to make tithing contributions to a church. There is no limitation on the monthly amount, nor is time period specified. Presumably, then, it is the future ongoing expense which is called for in the debtor’s bankruptcy forms.

Section 1325(b) states that tithing expenses are allowed so long as the amount is no greater than 15 percent of the debtor’s current yearly gross income. Once again, no limitation appears regarding the time period in which the claimed expense has occurred. And once again, it should be the future ongoing tithing expense which is listed in the debtor’s bankruptcy forms.

These two code sections make clear that in a chapter 7 or 13 case, the correct figure to list for tithing is the amount the debtor will contribute to his or her church in the future, after the filing of the bankruptcy case. This approach comports with the language of the bankruptcy code, and is to be favored over listing the amounts the debtor contributed just before filing bankruptcy. It also makes it possible to more accurately predict what the debtor can pay into a chapter 13 plan.

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Craig W. Andresen is a consumer bankruptcy lawyer in Bloomington, Minnesota, with 22 years’ experience in consumer and small business bankruptcy cases. He is the Minnesota chair of the National Association of Consumer Bankruptcy Attorneys, and is a member of the Minnesota State Bar Association’s Bankruptcy Section. Mr. Andresen lectures often on the topic of consumer bankruptcy at local and national legal seminars.
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