By Kitty J. Lin
Under 11 U.S.C. §302, if you are legally married, both you and your spouse will be able to file a joint bankruptcy petition and receive the benefits provided under the Bankruptcy Code. The Defense of Marriage Act (DOMA) that was signed into law on September 21, 1996, defines marriage as a legal union between one man and one woman and therefore prohibits the federal government from recognizing legal marriages of same sex couples. Bankruptcy court falls under federal jurisdiction. What does this mean? It means that bankruptcy courts will not recognize same sex couples as legally married and could potentially deny a same sex couple to file a bankruptcy together. This would mean higher costs for a same sex couple as they may potentially need to file two separate petitions and pay two separate filing fees.
All is not lost, however. On February 21, 2011, President Obama declared that the Defense of Marriage Act should be repealed and Attorney General Eric Holder indicated that the Obama Administration will no longer assert the constitutionality of the DOMA in Court. Prior to this, the U.S. Trustees or the Trustees administrating the individual cases would raise the objection in court and seek to dismiss the case if a same sex couple filed a joint bankruptcy petition. It would have been up to the individual judges who may dismiss the case for cause. The courts look at each case on a case-by-case basis and makes a decision based on the circumstances including what is the best interest of the debtors and creditors.
So if the United State Trustee, an arm of the Department of Justice, no longer defends the DOMA in court and defending DOMA to dismiss a case based on the marriage of a same sex couple, does that mean you now get to file a joint bankruptcy petition with your same sex spouse? That is most likely the case. If the trustee doesn’t object based on this issue the only other parties in interest that may have standing to object to your petition would be the creditors in your case. They would most likely not object due to the costs involved in hiring a bankruptcy attorney and the fact that it may also benefit the creditors to have the case be jointly administered if the debts were jointly incurred. Additionally, the creditor may receive a lot of negative publicity if they were to object to a joint case based on a same sex marriage. But ultimately the classic answers many bankruptcy lawyers give to questions is it depends upon the circumstances.
The Supreme Court is set to hear two same sex marriage cases. California’s Proposition 8 case will be heard on March 26, 2013 in Hollingsworth v. Perry. Windsor v. United States will be heard on March 27, 2013. We will wait and see what the Supreme Court has to say about same sex marriages and the constitutionality of DOMA.