Saturday, November 25, 2006

Bankruptcy: should non-profits get to be first in line?

A current tempest in Washington DC was started by a federal judge's ruling that some people filing for personal bankruptcy can't keep making charitable contributions before a bankruptcy court decides how much their creditors will get. The judge's logic is being interpreted as an unintended consequence of the 2005 revision of U.S. bankruptcy law, which was already widely seen as basically a giveaway to the credit card companies who everybody loves to hate. Sens. Orrin G. Hatch (R-Utah) and Barack Obama (D-Ill.) have quickly proposed legislation that would allow individuals in bankruptcy to continue giving to churches and charities; that bill has passed the Senate and is now before the House.

I was surprised to learn that a 1998 law had specifically allowed people in bankruptcy to exempt up to 15 percent of their annual income from creditors for tithing or charitable donations.
So the narrow issue is simply whether Congress with the 2005 law actually meant to undo that provision or not.

Nobody involved seems willing to face the broader question, namely: what all should someone who is availing themselves of the modern legal privilege called "bankruptcy protection" be allowed to hold back from that process? Bankruptcy is after all not a natural right but a highly-progressive social contract: our society agrees to impose undeserved losses on creditors so we don't have to have debtors' prisons and so that families that are hopelessly ruined financially can get a chance to start over. That's a concept which the U.S. pioneered and is rightly proud of (like the independent professionalised not-for-profit sector actually), and bankrupt families already get to keep their home and some other things safe from creditors and that's a good thing. So is writing another annual check to a favorite non-profit really fair to the parties about to be legally deprived of piles of money which they had voluntarily lent?


P.S. No doubt the preachers and their politicians will make this a religious-liberty issue (and Senator Obama climbs down into a similar rhetorical gutter with his absurd poverty straw man in that article linked above). But if we're gonna get biblical here then that columnist makes a valid counterpoint: the Bible, like every major holy writ that encourages tithing, also does not speak highly of failing to repay debt.

7 comments:

a fundraiser said...

I'm so glad you posted to our story on Don't Tell the Donor. While I disagree with the nature of this post... I'm so thrilled to have found your blog and I am adding you to our blogroll. Keep up the great work!

Anonymous said...

Great blog!

I want to share this article I read, Just Say No To Bankruptcy, the things you should know before filing bankruptcy.

Hope this resource be useful to your blog and your readers.

williamrichard said...

I'm so thrilled to have found your blog and I am adding you to our blogroll. Keep up the great work!
================================
williamrihcrad

http://www.shepelskylaw.com

Adi said...

Oes Tsetnoc one of the ways in which we can learn seo besides Mengembalikan Jati Diri Bangsa. By participating in the Oes Tsetnoc or Mengembalikan Jati Diri Bangsa we can improve our seo skills. To find more information about Oest Tsetnoc please visit my Oes Tsetnoc pages. And to find more information about Mengembalikan Jati Diri Bangsa please visit my Mengembalikan Jati Diri Bangsa pages. Thank you So much.
Oes Tsetnoc | Semangat Mengembalikan Jati Diri Bangsa

kimberly said...

buy viagra
viagra online
generic viagra

Anonymous said...

You have to express more your opinion to attract more readers, because just a video or plain text without any personal approach is not that valuable. But it is just form my point of view

janefermartin said...

Thanks for the information..I really like your post..I need some help!
I have consistently paid on my chapter 13 to the courts for about 1-year now. However, I am still behind on some properties I own and need to refinance everything I have. Any ideas? No the bankruptcy has not been discharged. As any private investors out there who will take a chance on a guy who wants to turn it around and wants to start over?
credit report