• 03
  • February
    2012

With the passage of legislation legalizing same-sex marriage seeming likely in New Jersey, a question that has not been fully wrought out in the federal courts is whether same sex couples - whether that be joined through civil union or marriage - are permitted to file a joint petition for bankruptcy. A recent California Bankruptcy Court ruled that the federal "Defense of Marriage Act", which bars federal recognition of same sex marriages, is unconstitutional. Judge Thomas Donovan held that two legally married California men should be permitted to file a joint Chapter 13 petition and be granted the same bankruptcy rights as any other married couple.

How Does the Bankruptcy Code Define Spouse?

Well that is one Judge's opinion but the Bankruptcy Code is not so clear. The Code permits only spouses to file joint petitions. 11 USC 302 of the Bankruptcy Code specifically provides:

(a) A joint case under a chapter of this title is commenced by the filing with the bankruptcy court of a single petition under such chapter by an individual that may be a debtor under such chapter and such individual's spouse. The commencement of a joint case under a chapter of this title constitutes an order for relief under such chapter. (emphasis added)

Are civil union partners or married same sex couples each other's "spouse"? In 2004, the Bankruptcy Court in In re Kandu, dealt with this issue in dismissing a joint case filed by a same-sex couple whose marriage was legal under Canadian Law. 315 B.R. 123 (Bankr. W.D. Wash. 2004). In Kandu, the Bankruptcy Court held:

The language of the Defense of Marriage Act is clear and unambiguous. It states that, in all acts of Congress, the term "marriage" means only the legal union between one man and one woman, and the word "spouse" refers only to a person of the opposite sex that is a husband or wife.

However, it is exactly this provision in the Defense of Marriage Act that Judge Donovan ruled was unconstitutional. Judge Donovan ruled that the Defense of Marriage Act - which defines "spouse" under federal law as "a person of opposite sex who is a husband or a wife" - violates the couple's equal protection rights under the due process clause of the Fifth Amendment.

The reason why any couple -whether a same sex couple or a traditionally married husband and wife - are better off filing a joint petition is because they have joint debt: the mortgage loan is in both their names, the car loan, credit cards etc.. In the past, I have filed separate petitions and subsequently made a motion to administratively consolidate the cases. This is more expensive for the debtors: there are two filing fees, and attorney fees are much more than otherwise. It is also administratively burdensome and doubly stressful for the petitioners.

The seminal case of Butner v. United States held that the bankruptcy court is to look to the state law when determining property rights, it seems to make sense that same-sex domestic couples should be able to file a joint petition; especially, now that there appears to be some support in the federal judiciary. 440 U.S. 48, 49 (1979). Since New Jersey's passage of the Domestic Partnership Act, wherein same-sex couples may form civil unions and be granted the same rights and privileges as married couples, I have been tempted to file a joint bankruptcy petition for domestic partners. If same sex marriage is legalized, I will be sure to try it out. It may be that a same sex partner is not a "spouse", at least as far as the Bankruptcy Code is concerned. However, judging from how 18 of the 24 bankruptcy judges in California have viewed the definition, it may be time to test the waters here in New Jersey.