Grassley Scores Victory in Judiciary Committee for Religious Freedom


Bill Would Keep Bankruptcy Court Out of Church Coffers


Jill Kozeny

202/224-1308


Sen. Chuck Grassley of Iowa today won approval from the Senate Judiciary Committee for his bill to protect tithing and charitable giving under the federal bankruptcy code.

Grassley said his legislation will provide greater religious freedom and fair treatment for individuals who commit themselves to giving part of their income to churches or other charities while recovering from bankruptcy

"Freedom of religion is one of our most important constitutional liberties," Grassley said. "My proposal responds directly to decisions made by federal judges which leave churches open to bankruptcy lawsuits and force charities to return money given through tithing. It would prevent federal judges from un-doing a voluntary act of worship in the way of tithing, as described in the Bible."

In addition to protecting money which has been donated already to a church or tax- exempt charity organization, Grassley's legislation also would protect tithing after Chapter 13 bankruptcy has been declared. Chapter 13 allows debtors to re-pay a discounted portion of their debts. Grassley said the problem is that under current law debtors are permitted to budget a moderate amount of money for entertainment expenses, but they are not allowed to budget money for tithing.

"It doesn't make sense that a person repaying debt under Chapter 13 can budget for a burger and a movie but not for a charitable contribution to his or her church, even when that individual has demonstrated in practice that he or she believes that tithing is Biblically-mandated. In fact, current law violates individual religious freedom," Grassley said.

Specifically, Grassley's Religious Liberty and Charitable Donation Protection Act of 1997 would amend two aspects of the federal bankruptcy code.

  • It would prevent federal bankruptcy judges from ordering churches and other charitable organizations with tax-exempt status to return donations of up to 15 percent of debtors' gross annual income. In addition, where debtors have demonstrated past patterns of giving greater percentages of income, those donations would be protected by Grassley's legislation. Grassley said his bill is written so as to prevent any debtor who has not demonstrated a commitment to tithing from shielding assets from creditors with a sudden rash of charitable giving.
  • It would allow Chapter 13 debtors to include a charitable contribution of up to 15 percent of their gross annual incomes in budgets for repayment of debt.

Last September, Grassley held a hearing on this subject as Chairman of the Judiciary Subcommittee on Administrative Oversight and the Courts. This subcommittee maintains jurisdiction over bankruptcy issues. Witnesses at the hearing shared first-hand accounts of their religious freedoms being impacted by the federal bankruptcy code. Earlier this month, Grassley testified on his amendment before the comparable subcommittee in the U.S. House of Representatives. Companion legislation to the Religious Liberty and Charitable Donation Protection Act of 1997 also was introduced last fall in the U.S. House of Representatives by Rep. Ron Packard of California.

Grassley said that next week he will introduce business bankruptcy legislation to protect patients when hospitals go bankrupt, to promote cooperation in international bankruptcies and to speed up Chapter 11 reorganization proceedings.