[CNYBBA-LISTSERV] FW: Diagostino

[Lynn Harper Wilson]

Here's a forwarded message from Mark.  Appears to be an article from NACBA.
I put the Diagostino decision on our web site at
http://www.cnybba.org/diagostino.pdf.
***************************************
Lynn Harper Wilson, Staff Attorney
Standing Chapter 12 & 13 Trustee's Office
Syracuse, New York
    e-mail:  <mailto:lhwilson at cnytrustee.com> lhwilson at cnytrustee.com
        web site:  <http://www.cnytrustee.com/> http://www.cnytrustee.com 

 
 -----Original Message-----
 
COURT: CREDIT CARD COMPANIES PUT AHEAD OF CHURCH TITHING BY CONTROVERSIAL
2005 BANKRUPTCY REFORM LAW
 
WASHINGTON, D.C.//September 7, 2006////Thou shalt have no gods before me ...
except for MasterCard, Visa and American Express.
 
That's the way the United States Bankruptcy Court for the Northern District
of New York is reluctantly interpreting the controversial U.S. bankruptcy
reform law that went into effect last October. The court says those going
through bankruptcy may not tithe to their church or make other charitable
donations . until after they have paid off credit card companies and other
creditors. Before the new law went into effect, bankruptcy court judges were
required to permit debtors to tithe a portion of their income on a regular
basis.
 
The 2005 law could have a major impact on the large number of Christians and
members of other faiths that are called upon to tithe a portion of their
income on a regular basis. More than two million Americans filed for
bankruptcy protection in 2005, and hundreds of thousands will do so during
2006.
 
Henry Sommer, president of the National Association of Consumer Bankruptcy
Attorneys (NACBA), said: "For religious Americans who find themselves deeply
in debt due to job loss, catastrophic medical expenses or other
circumstances, the 2005 reform legislation didn't just reword the federal
bankruptcy code, it also effectively rewrote Exodus and Deuteronomy. Many
who practice their faith and believe that they are bound by creed to tithe a
portion of their income will find that Congress effectively decided that
what credit cards want is more important than the deeply personal religious
practices of Americans."
 
Sommer added:  "Our nation's founding fathers who envisioned a separation of
church and state never imagined that this division would be used to engorge
the profits of moneylenders at the expense of churches."
 
In the case, the debtors, Frank and Patricia Diagostino, filed chapter 13
bankruptcy on March 1, 2006.   In the paperwork required under the means
test, the debtors listed a monthly expense of $100 for "continued charitable
contributions."  This expense would reduce the disposable income available
to pay unsecured creditors from $80,351.25 to $74,351.25 (at the rate of
$100 per month for five years).  
 
The trustee in the Diagostinos' case objected to the expense.  The 2005
bankruptcy reform law enumerates several "reasonably necessary" expenses
that are allowed, such as health insurance and disability insurance, but
does not mention charitable contributions as such.  According to the IRS
guidelines which dictate permissible expenses in bankruptcy, charitable
contributions may be included under the category of "other expenses" only in
very limited circumstances, such as being a minister with an employment
contract requiring tithing.
 
In his August 28, 2006 opinion (In re: Diagostino and Diagostino, Case No.
06-10384), U.S. Bankruptcy Judge Robert E. Littlefield, Jr. ruled:   "This
change [under the 2005 law] effectively closes the door for debtors who are
above the median income from deducting charitable contributions as an
expense unless they can establish the contributions fall under the IRS
guidelines. 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 for a
debtor in bankruptcy is for Washington to decide.  However, consistency and
logic would demand the same treatment of all debtors . Until Congress amends
[the 2005 Act], the court's hands are tied and the tithing principles that
this court once applied pre BAPCPA (the Bankruptcy Abuse Prevention and
Consumer Protection Act  of 2005) have been effectively mooted."
 
 ABOUT NACBA
 
The National Association of Consumer Bankruptcy Attorneys
(http://www.nacba.org) is the only national organization dedicated to
serving the needs of consumer bankruptcy attorneys and protecting the rights
of consumer debtors in bankruptcy.  Formed in 1992, NACBA now has more than
3300 members located in all 50 states and Puerto Rico.   
 
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