Bill Would Protect Gifts to Churches

The U.S. Senate last week approved legislation that would protect churches and other charities from having to give up contributions they received from donors who later declare bankruptcy.

Currently, bankruptcy trustees across the country are suing to force churches to turn over donations made as much as six years before a donor filed for bankruptcy. The Senate measure would bar such recoveries unless a trustee could show that a donation had been made specifically to defraud creditors.

“The Senate is telling bankruptcy judges to get their hands out of the offering plate,” said Steven T. McFarland, who directs the Center for Law and Religious Freedom at the Christian Legal Society. “Presently, if a debtor blows every last dollar on gambling and liquor, the trustee cannot recover the money from the casino or liquor store. But if the debtor donates that same money to his church or the Red Cross, the creditors can force repayment.”

A House committee was considering similar legislation last week.