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Can Bankruptcy Trustees Recover Charitable Contributions?

A federal appeals court issues an important ruling.

In Re Young, 82 F.3d 1407 (8th Cir. 1996)

Background. A member of your church suffers a business setback that prompts him to file for bankruptcy. Several weeks later, your church receives an official letter from the bankruptcy trustee, demanding that the church return all contributions the member made within a year of filing his bankruptcy petition. How would you respond? This is an important and practical question that every church treasurer should be prepared to answer. A recent court ruling provides helpful guidance.

Key point. The court's decision is of utmost importance to churches and church treasurers. The number of persons filing for bankruptcy protection is at an all-time high. It is not uncommon for several members within the same church to have had their debts discharged in bankruptcy. This exposes the church to possible demands from a bankruptcy trustee to return contributions ...

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Posted:
  • November 1, 1996

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