32 Loy. L. A. L. Rev. 1029 (1998-1999)
Generosity in Bankruptcy: The New Place of Charitable Contributions in Fraudulent Conveyance Law; Walt, Steven

handle is hein.journals/lla32 and id is 1055 raw text is: GENEROSITY IN BANKRUPTCY: THE NEW
PLACE OF CHARITABLE CONTRIBUTIONS IN
FRAUDULENT CONVEYANCE LAW
Steven Walt*
Should generosity be allowed in bankruptcy when being gener-
ous comes at the expense of one's creditors? Congress apparently
thinks so. As part of ongoing efforts to revise bankruptcy law, Con-
gress recently amended the Bankruptcy Code (the Code) with the
Religious Liberty and Charitable Donation Protection Act' (the
Act). The amendments are an attempt to ensure that bankruptcy
does not interfere with a good deal of charitable giving. Pre-
bankruptcy contributions to qualifying charities under prescribed
conditions are insulated from attack as constructively fraudulent
transfers.2 Nor can the trustee avoid the transfer by recourse to state
fraudulent conveyance law.3 The amendments also restrict the occa-
sions on which a court can take into account the making of such
gifts. For instance, a bankruptcy court cannot consider these gifts in
deciding whether to dismiss a bankruptcy case filed under Chapter 7
for substantial abuse of the Chapter. Charitable gifts are excluded
from the individual debtor's disposable income.5 A debt adjustment
plan proposed in a Chapter 13 case therefore can be confirmed over
the objection of unsecured creditors even when the plan does not
promise to pay them amounts that would otherwise be contributed to
charities.6 Therefore, in both Chapter 7 and Chapter 13 cases, more
* Professor of Law, University of Virginia School of Law. I am grateful
to Adam Hirsch, Kevin Kordana, Emily Sherwin and Mary Jo Wiggins for dis-
cussions on the topic.
1. Pub. L. No. 105-183 (1998).
2. See 11 U.S.C. § 548(a)(2) (1998); infra text accompanying notes 9-10.
3. See 11 U.S.C. § 544(b)(2) (1998).
4. See id. § 707(b).
5. See id. § 1325(b)(2)(A).
6. See id. § 1325(b)(1)(B).
1029

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