Questions of Fact and Faith: Tithing, Undue Hardship, and Student Lo...

By: Jessica Wright

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

In In re Lovell,[1] the Bankruptcy Court for the Northern District of Iowa, held that a debtor who tithed approximately 11% of her gross income was nevertheless entitled to a hearing on whether she qualified for a hardship discharge of her student loan debt.[2] The debtor received a Chapter 7 discharge and then filed an adversary complaint for a discharge of her student loans, arguing that the loans would impose an undue hardship based on her current income and monthly expenses.[3] The debtor was gainfully employed and earned $44,255.04 per year,[4] and in her self-reported monthly expenses[5], she included charitable donations and tithes to her church amounting to nearly 11% of her gross income.[6] In assessing her expenditures, the court held that making charitable contributions and tithing is not per se unreasonable when requesting discharge of student loan debt. Instead, a fact-intensive inquiry into the appropriateness of such expenditures is required. For this reason, the court held that it was precluded from granting summary judgment to the creditor.[7]