Bankruptcy law forbids tithing, charitable donations
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Effects of the ruling
David Skeel, scholar-in-residence at the American Bankruptcy Institute and law professor at University of Pennsylvania, thinks that the situation may need congressional intervention.

"We are either relying on another case to interpret the decision differently or Congress to change the provision. It's crystal-clear that this is not what the 2005 amendments were intended to do. The court's opinion is defensible based on what the current statute says."

Meanwhile, although the decision doesn't bind judges in other districts, it may cause bankruptcy attorneys to notify their clients of the change.

Consumer bankruptcy attorney Brett Weiss in Olney, Md., says he will warn his clients. He says he has had a number of clients who tithe, and the ruling puts consumers in a "horrible dilemma."

"People file because overwhelming majorities have had horrible things happen to them," he says. "And now we have to say, 'Well, you might not be able to fix things if you continue to tithe.'"

Creditors may have supported the new law, but not all are supporting the recent decision.

"Certainly the industry does not want to see this happen, and the opinion deserves a closer look," says Laura Fisher of the American Bankers Association, which represents creditors.

Mark Swan, an attorney who represents creditors in bankruptcies in Salt Lake City, says unless a creditor has a significant claim, he doesn't think creditors are going to raise the issue.

"Let's say I'm a credit card creditor who's owed $1,000 and objecting to the tithing raises the disposable income another few percentage points. As a creditor I'm not going to raise an objection to get another $10 or $20."

He believes the ruling will become more of an issue with the Chapter 13 trustees.

"I suspect in Utah, because of our prevalence of tithe-givers, the judges may continue to allow charitable contributions."

Architects of revised law intervene
Because the Department of Justice oversees Chapter 13 trustees, Sen. Grassley, Hatch and Sen. Sessions contacted U.S. Attorney General Alberto Gonzales on Sept. 15.

In their letter, they "urged the Department to file court papers in appropriate cases to correct this misinterpretation, as well as issue mandatory guidance to Chapter 13 trustees so that they do not object to reasonable charitable contributions in Chapter 13 repayment plans.

"For people of faith in America, the obligation to tithe presents a significant part of the free exercise of religion, which is guaranteed to all Americans under the First Amendment," wrote the senators.

"As the lead sponsors of both these important bankruptcy statutes, we can assure you that Congress never intended to exclude reasonable tithing in bankruptcy repayment plans."