February 2011 Post Archive

February 24, 2011

The Obama administration orders DOJ to stop defending the Defense of Marriage Act (DOMA) in federal court

Just a couple weeks after I blogged about the fact that due to the Defense of Marriage Act (DOMA), same sex married couples and domestic partners aren't allowed to file joint bankruptcy cases and must file separately, thus paying twice the filing fees of hetero couples, it looks like DOMA is well on its way to being repealed.  On 2/23/11 President Obama ordered the DOJ to stop defending DOMA in federal court.  Bankruptcy is federal.  This means that if I were to file a joint case for a same sex couple who is lawfully married (or perhaps even domestic partnered), it would probably not be met with any resistance from the feds.     

February 8, 2011

Same Sex Married Couples and Domestic Partners Could Pay Twice As Much As Heterosexual Couples For The Same Bankruptcy Relief

You can thank the federal Defense of Marriage Act ("DOMA") http://en.wikipedia.org/wiki/Defense_of_Marriage_Act (signed by Bill Clinton, no less) for the fact that same sex domestic partners and same sex married couples cannot file a joint bankruptcy petition even though their marriage or partnership may be legal in their state.  Bankruptcy is federal law as is DOMA.  DOMA trumps state law in the bankruptcy forum.

A heterosexual couple can file individually or jointly.  Filing jointly is less costly (one filing fee as opposed to two).  Currently, a chapter 7 filing fee is $299, and a Chapter 13 filing fee is $274.  So double those fees if you are in a same sex relationship that is legally recognized in your state and you both want to file for bankruptcy protection.  There are many reasons why filing jointly may be desirable and efficient, such as where the majority of property you own is considered "community property" under state law.  Do you divvy it up on the two petitions?  Or list all the property on one petition and nothing on the other one?  If you must file two individual petitions instead of one joint one, all the community property assets will arguably belong to the estate of the case first filed, presumably leaving no assets for the second case filed.  This can become very confusing for both debtors' counsel, trustees, and creditor's counsel and make the process more difficult and costly.

Moreover, attorneys may charge you legal fees for two cases instead of one, since you are in fact, filing two cases.  I do not do this.  In same sex marriage or domestic partnership cases I charge a legal fee for one case even where I file two petitions since that is what I would charge a heterosexual couple for a joint petition.  I think it's inherently unfair to make a same sex couple pay double for this service.  Nevertheless, it is in fact twice the work for me to do, so I also end up taking the hit because of an unfair law.

Then there is the issue of exemptions.  If you can't have the benefit of filing a joint petition, and the feds are going to treat you like "roommates", can you at least double up your exemptions?  In California the answer is no.  Example:  A married heterosexual couple may take a $100,000 homestead exemption where a single individual could take $75,000.  Can the same sex couple each take a $75,000 homestead exemption, effectively giving them a $150,000 collective homestead exemption?  No.  In other words, when it comes to bankruptcy, same sex couples are treated "equally" when it benefits the bankruptcy estate, but not when it would benefit them as debtors.

This is just another area where same sex couples are denied important benefits readily available to heterosexual couples.