Lawmakers in Senate support bill protecting churches from creditors

Friday, February 27, 1998

WASHINGTON (AP) – A Senate panel has unanimously approved a bill
that would protect from creditors tithes and pledges that churches
receive from people who have declared bankruptcy.


Judiciary Committee Chairman Orrin Hatch, R-Utah, and Sen.
Charles Grassley, R-Iowa, co-sponsored the bill in one of the first
attempts to resurrect protections under the 1993 Religious Freedom
Restoration Act, which was largely voided by the Supreme Court last
year.


Since then, courts have asked several churches to surrender to
creditors money from donors who had declared bankruptcy. “Such
judicial action seriously threatens the ability of religious
institutions not only to function but to survive,” Hatch said in a
statement Thursday.


His bill would prevent federal bankruptcy judges from forcing
churches and other tax-exempt, charitable organizations to return
donations of up to 15 percent of a debtor’s gross annual income.
The bill protects post-bankruptcy tithing.


No date is set for a floor vote on the bill.


Rep. Ron Packard, R-Calif., has introduced a companion bill in
the House, co-sponsored by more than 100 lawmakers including
Speaker Newt Gingrich, R-Ga. That measure has yet to be considered
by the House Judiciary Committee.


Since President Clinton signed the Religious Freedom Restoration
Act in 1993, courts considering the law have ruled that government
has compelling interests in enforcing participation in the Social
Security system, maintaining prison security by regulating inmates’
religious ceremonies and promoting school safety by banning the
carrying of ceremonial knives on campus.


But courts have split over issues that arise when the act and
the bankruptcy system collide. In a 2-1 ruling, Minnesota’s 8th
Circuit court said keeping the bankruptcy trustee out of the
church’s offering plate would not undermine the bankruptcy system.


Supporters of the act, including Hatch, had been upset that the
Clinton administration initially supported the bankruptcy trustee
in the Minnesota case. The administration pulled out of the case
the day it was argued before the 8th Circuit panel in 1994.


The Justice Department said it withdrew because Clinton decided
that its position “adopted a narrower view of the Religious
Freedom Restoration Act than his understanding of the …
statute.”