Policy Update

New Bankruptcy Rule Hampers Charitable Gifts

9/25/2006

Source: Independent Sector

A ruling by the U.S. Bankruptcy Court for the Northern District of New York has revealed an unintended-- and controversial--consequence of Congress' 2005 overhaul of the federal bankruptcy code: according to new language in the law, debtors with incomes at or below the state median are permitted to count charitable contributions as living expenses and, consequently, protect them from creditors; however, individuals with incomes above the median are not. 

In a letter to Attorney General Alberto R. Gonzales, Senate Finance Committee Chair Charles Grassley (R-IA) and two other co-sponsors of the new law oppose the court ruling.  Source: CQ Today