Update: Obama bill would allow bankrupt worshippers to tithe

October 2, 2006

WASHINGTON (RNS) America's charitable but bankrupt worshippers will once again be able to tithe if Sen. Barack Obama has his way. The Illinois Democrat announced Monday (Oct. 2) that legislation to protect debtors had passed the Senate over the weekend.

"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."

Last month, a federal judge in New York said bankruptcy reforms passed by Congress last year bar individuals from making charitable contributions if they are also seeking bankruptcy protection.

Obama said his bill will clarify that last year's bankruptcy bill did not change the law "to prioritize creditors over religious institutions and charities."

Obama said he expects the legislation, which he introduced with Sen. Orrin Hatch, R-Utah, on Friday (Sept. 29), to make its way through the House when Congress reconvenes in November.

In 1998, Congress passed the Religious Liberty and Charitable Donation Protection Act, which allowed individuals in bankruptcy to exempt up to 15 percent of their annual income from creditors for tithing purposes.

That rule was largely undone when Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

More than 2 million Americans filed for bankruptcy protection in 2005, and hundreds of thousands are expected to do the same by the end of 2006, according to the National Association of Consumer Bankruptcy Attorneys.

-- Jason Kane