Giving to charity is a very important part of my religious beliefs- Can I still donate if I file for bankruptcy?

Yes. Yes you can. And bless you for even wanting to. I must admit that when I tighten the belt, the first thing I cut is donations. But for many people, tithing or other forms of giving to their church of choice is a fundamental part of their religious practice. The good news for you (and for all of those who benefit from your generosity!) is that the government will not make you stop doing this before, during or after you file for bankruptcy.

There are a few rules to follow though. Make sure that the organization you are donating to is a 501(c)(3). That is lawyer lingo for a charity that the IRS recognizes. Most churches as well as a number of other types of charitable organizations have 501(c)(3) status and so if you are so inclined, you can keep contributing.

You do need to be able to prove that you gave what you said you gave. Ask the organization for a letter that you can copy for both your tax returns and your bankruptcy lawyer and Trustee. In our office,  we look at your tax returns for the last two years to make sure that what you say pretty much matches what you told the IRS. The Trustee will look as well. The reason is so that people can’t be sneaky and just say that they give money to charity in order to qualify for a Chapter 7 bankruptcy. Or to make their disposable income look smaller if they are going the Chapter 13 route. For these reason, it really helps your cause – and the cause you care enough to donate to, for that matter – if your pattern has been to make fairly regular donations. If you literally just decided to start donating, this looks like a bad idea to the Trustee. They wonder if you might be trying to work the bankruptcy system to your advantage.

Long story short, if you have a history of making charitable contributions to your church or even to another charity, you get to keep doing this. Just to make sure you have records to prove it and you are not likely to raise any big red flags.

If you are experiencing a similiar situation, contactyour nearest bankruptcy attorney to received expert advice.