The Religious Liberty and Charitable Donation Protection Act of 1998
A federal law protects the charitable giving of donors who declare bankruptcy

A federal law protects the charitable giving of donors who declare bankruptcy

Article summary. Last year Congress enacted the Religious Liberty and Charitable Donation Protection Act. The Act accomplishes two important results. First, it protects churches and other charities from demands by bankruptcy courts that they return contributions made by a bankrupt donor. Second, the Act allows most persons who file for bankruptcy to continue making contributions to their church or charity. In the past, many courts rejected both of these protections. This article provides church leaders with a practical understanding of how the new law will affect them.

In the past, churches were hurt by federal bankruptcy law in two ways. First, many courts ruled that bankruptcy trustees could recover contributions made to a church by a bankrupt donor within a year of filing a bankruptcy petition. Second, church members who declared bankruptcy were not allowed by some bankruptcy courts to continue making contributions to their church. These harmful restrictions were eliminated last year when Congress enacted the Religious Liberty and Charitable Donation Protection Act. The Act, which is actually an amendment to the bankruptcy code, provides significant protection to churches as well as to church members who file for bankruptcy. This feature article will review the background of the Act, explain its key provisions, and demonstrate its application with practical examples.

Authority of bankruptcy trustees to recover charitable contributions

Log In For Full Access

Interested in becoming a member? Learn more.

View All
from our store
Church Finance

Church Finance

Learn about budgeting, financial reporting, tax compliance, insurance coverage, and more.
2019 Church & Clergy Tax Guide

2019 Church & Clergy Tax Guide

Find comprehensive help understanding United States tax laws as they relate to pastors and churches.
Charitable Contributions Bulletin Inserts

Charitable Contributions Bulletin Inserts

Help your members give more by answering their charitable giving and tax law questions.
Increase Giving at Church

Increase Giving at Church

Develop practical and digital strategies to cultivate a culture of giving.

ChurchSalary

ChurchSalary

Experience a whole new way to set compensation. Eliminate the guesswork – get access to detailed compensation reports in just minutes.