Doing One’s Part Even During Bankruptcy in Indiana

April 19, 2012 10:55 am Published by

The new bankruptcy laws of Indiana may be strict, but in another sense, they’re generous.  That’s especially true when it comes to people filing personal bankruptcy in Indiana who still want to give to charitable causes while paying their debts.

In these Bankruptcy in Indiana articles, I’ve often talked about bankruptcy myths, one of which is that only financially careless people ever file individual bankruptcy in Indiana.  The fact is, not only  are typical debtors who seek Indiana bankruptcy help far from “deadbeats”, often they want to help others less fortunate than themselves!

One of my colleagues, a Columbus bankruptcy lawyer, called my attention to a headline in Forbes Magazine: “Debtor’s Charitable Giving Limited to 15% of Gross Income in Bankruptcy”. In a recent ruling in a Colorado bankruptcy case, it seems, the court allowed a couple to give 15% of their gross income to their church, even though that meant less money would be available to pay their creditors under Chapter 13 bankruptcy law.

Over the twenty five years that I’ve served as a debt consolidation lawyer offering Indiana bankruptcy help, charitable giving during bankruptcy has been handled in different ways.  Back in 2006, for example, we in the Zuckerberg bankruptcy law offices were discussing a New York ruling which said that debtors who had above-median income could not make any charitable donations while they were in their debt repayment plan period.

I’m happy to report that current law allows contributions if:

  • The money is going to an approved “qualified” religious or charitable organization
     
  • The contribution isn’t more than 15% of the debtor’s gross income.
     

I must say that, for most of the people who come to me needing help to stop foreclosure on their home, help recovering a car that’s been repossessed, payday loan debt help, or student loan debt help, charitable giving is not at the top of their minds as they contemplate filing individual bankruptcy in Indiana.

On the other hand, debtors need to make some hard, even painful decisions as they prepare to file bankruptcy. Feeling that they can still do their part for a cause they believe in helps get them through, holding their heads high until they get back on their financial feet!

 

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This post was written by Mark Zuckerberg

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