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When the collection plate goes around at weekly services, America's charitable but bankrupt worshippers must now abstain. A federal judge has reluctantly ordered debtors to repay their credit-card bills first.

Judge Robert E. Littlefield Jr. of the U.S. Bankruptcy Court for the Northern District of New York has ruled that charitable or religious contributions are no longer considered a necessary living expense for those filing Chapter 13 bankruptcy.

"This change effectively closes the door for debtors who are above the median income from deducting charitable contributions as an expense," Littlefield wrote in his Aug. 28 opinion.

The judge was interpreting a law that went into effect last October which, in effect, deems "tithing" acceptable only in very limited circumstances, such as for ministers who must donate as part of their contract.

Littlefield said the 2005 law trumps the Religious Liberty and Charitable Donation Protection Act, signed in 1998 by President Clinton, which allowed tithing under the bankruptcy code.

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.

Henry Sommer, president of the group, said the legislation favors the credit industry at the expense of religious liberty.

"Some people who need bankruptcy protection may hesitate to file if they are not allowed to tithe and would then be denied the relief they might need," Sommer said. "It makes you choose between spiritual necessity and physical necessity,"

The opinion was handed down in the case of Frank and Patricia Diagostino of Massena, N.Y., who filed chapter 13 bankruptcy last March. When reporting monthly expenses, they tacked on a $100 allowance for "continued charitable contributions." The amount was flatly rejected by the bankruptcy trustee, who said the Diagostinos made more than the state's median income level, prohibiting them from making charitable contributions.

Mark Swan, a Salt Lake City attorney who represents creditors, said there is no "expectation in any religion that people pay the church and not their debts."

"I have a different opinion as a religious person than as an attorney," Swan said. "As an attorney, I go by the law. As a religious person, I believe there isn't an expectation on God's part that people break contracts to contibute to the work of his church.

"What good is it for your spiritual life or for the church if it looks like we're ignoring our obligations to each other to give to the church?"

The New York decision may lead credit-card companies to demand similar treatment in other states.

Universal enforcement would adversely affect congregations that expect their members to tithe 10 percent of their total income, including the Church of Jesus Christ of Latter-Day Saints (the Mormons), some Protestant denominations, and other religious groups.

Judge Littlefield criticized the legislation, but said the "court's hands are tied" until Congress makes further revisions.

"The court does not agree with this awkward, bifurcated congressional framework which makes charitable giving easier for some debtors and not others. Whether tithing is or is not reasonable is for Washington to decide," he said. "However, consistency and logic would demand the same treatment of all debtors."

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The Salt Lake Tribune, Deseret Morning News, and Albany Times-Union also have published stories on the decision.

The decision prompted the National Association of Consumer Bankruptcy Attorneys to issue a press release again criticizing 2005 Bankruptcy Reform Law.

At the time of posting, Littlefield's decision was not available at the court's website.

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September (Web-only) 2006, Vol. 50