Recovery of tithes held not to be substantial burden

[Rick Nelson, Esq.]

Note that the issue in these cases is whether the person declaring
bankruptcy engaged in a "fraudulent transfer" under 11 U.S.C. Section
548(a)(2)(A).  This test has four parts.  The most significant in these
cases is whether the debtor (church member) received "less than reasonably
equivalent value" for the tithe.  Thus, a visit to the doctor's office would
not be a "fraudulent transfer" because the person received a service.  This
brings us to the central question:  Is the gift (tithe) in exchange for
something of reasonable value and thereby not a "fraudulent transfer"?
Because a church would not demand that one pay a tithe before being
permitted to join in the fellowship, some courts hold that tithes are not in
exchange for something of reasonable value (i.e. tithes are attempts to
avoid paying other creditors) so bankruptcy trustees are pursuing these
church members to recover monies which should be made part of the "fund" set
up to pay all creditors.

Which raises the religious freedom issue: "Are tithes an expression of our
religious faith by Biblical mandate (i.e. central) or merely secondary?"  In
Gomes, the court held, "the trustee's efforts to avoid the [fraudulent]
transfers have neither restricted the Gomes . . . tithing practices nor done
anything to shake the Gomes' belief that they should tithe."  Contrast with
Hodge; Magic Valley Evangelical Free Church, Inc. v. Fitzgerald and Young;
Christians v. Crystal Evangelical Free Church.
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Rick Nelson, Esq.
Liberty Counsel
1 (800) 671-1776
rick at lc.org