Senate passes measure after ruling in New York case that couple cannot continue to give
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Albany Times Union
Bill aims to protect post-bankruptcy tithing
Senate passes measure after ruling in New York case that couple cannot
continue to give
By MICHELE MORGAN BOLTON, Staff writer
Tuesday, October 3, 2006
ALBANY -- A debtor's right to make reasonable religious donations during a
financial reorganization would be protected under a bill, based on a New
York bankruptcy case, that was hastily passed in Washington last weekend.
The unanimous vote in the Senate early Saturday comes amid an outcry against
a 2005 federal bankruptcy reform package critics say protects the credit
card, credit union and car dealership lobbies at the expense of the rights
of the faithful. The bill still faces a vote sometime this fall in the House
of Representatives.
Judge Robert Littlefield ruled in August that the controversial 2005 law
prohibits an Adirondacks couple who filed for Chapter 13 protection from
continuing to pay $100 a month to the Sacred Heart Parish of Massena while
they reimburse their unsecured creditors.
At the time, Littlefield, a judge for the Northern District of New York,
said reform legislation clearly says such a contribution is not considered a
reasonable or necessary expense when a family's income is above the median
level.
After being blasted by religious leaders and a national bankruptcy lawyers
association in recent weeks, ranking Republican Sen. Orrin G. Hatch of Utah
released a statement saying he usually opposes resorting to such an
"impromptu legislative response to judicial decisions."
"But the religious practices and beliefs of individuals should not be
subject to the whims of judicial interpretation," he said, striking back at
Littlefield.
"This bill ensures those who tithe can continue to live their faith while in
bankruptcy."
Hatch said Littlefield's ruling sidelined the clear congressional intent
behind the Religious Liberties and Charitable Donation Protection Act of
1998 and the Bankruptcy Abuse Prevention and Consumer Protection Act of
2005.
In admitting that the law he drafted "isn't perfect," the cosponsor of both
bills said the intention was always "to preserve an individual's religious
freedom to tithe. I believe that Sen. Obama and I have put together a
narrowly tailored bill that clarifies the law."
Hatch and Illinois Democrat Barack Obama co-sponsored Saturday's bill.
Littlefield said through a law clerk that it wasn't appropriate for him to
comment on his decision. But in the August ruling he made it clear that the
law, as it was written, allowed no room for discretion.
Saturday's vote prompted considerable interest from the sidelines.
"It was not the 'whim of judicial interpretation' that produced the result,"
said Jonathan C. Lipson, an associate professor of commercial, corporate and
bankruptcy law at Temple University in Philadelphia.
"Quite the opposite," Lipson said. "It was incompetent drafting by Congress
that forced the judge to produce the result the statute compelled."
"If, like Hatch, you want to force legislation down judges' throats, you'd
better be sure you're happy with what you've written," he went on.
What's to determine whether a couple in bankruptcy spends $100 on a church
offering or a Saturday night dinner and a movie, mused Anthony Picarello, an
attorney with the Becket Fund for Religious Liberty in Washington, D.C.
"To single out religious gifts for a prohibition in the national context
raises a very serious constitutional problem," he said.
Bankruptcy's biggest problem is that it is statutory, said Albany attorney
Richard Croak. Thus, there is no case law on which to base decisions.
"This is like 'Alice Through the Looking Glass,' " he said, however. "First
you have the verdict, then you get the trial. That's what happened here."
"This was overkill for 25 bucks a week," Croak said.
Had he been the couple's lawyer, Croak said, he would have appealed
Littlefield's decision, drawing on a 2005 Supreme Court ruling that said
it's the intent of the law in such cases that must be followed.
When the new bankruptcy guidelines were signed into law, a key provision
subjected certain requests for debt relief to undergo "a means test," or an
examination of income, debt burden and various allowable living expenses
based on place of residence and other circumstances.
It was supposed to ensure that people with relatively high incomes wouldn't
be allowed to file for Chapter 7 relief, in which unsecured debts are erased
by the court.
Instead, they would either be allowed to file a Chapter 13 petition, in
which some debt must be paid out of future income, or have their petitions
rejected.
Provisions that once let debtors exclude up to 15 percent of their gross
income were left out of the most recent version of the tax law statute.
"If the law had been written correctly, it would have capped it for those
below the median income and left it open for those above," Croak said.
Reforms were supposed to make it difficult for a debtor to go bankrupt, he
explained: "The reality is, it just made it more expensive."
