Same Sex Couples Filing Bankruptcy

Great News for Married Same Sex Couples

Who Need to File Bankruptcy!Same Sex Couples Filing Bankruptcy

 

Gay rights have come a long way over the last 20 years. The perfect example of that is the announcement on February 10, 2014 by Attorney General Eric Holder who said, “It is the (Justice Department’s) policy to recognize lawful same-sex marriages as broadly as possible, to ensure equal treatment for all members of society regardless of sexual orientation.”

How Does Holder’s Announcement Affect

Same Sex Couples Filing Bankruptcy?

Previous to same-sex marriage being available in any state, all gay or lesbian couples had to file two separate bankruptcies if they could not pay their debts. That meant twice as much in attorney’s fees, as well as double the court filing fees. Worse yet, they still had to include the other person’s income as income to the household for a punitive part of the bankruptcy law commonly referred to as the “means test”! This provision was designed by the credit industry to limit the ability of people.

As some states slowly ratified same-sex marriage, the couple in those states could usually get the same treatment as a heterosexual married couple everywhere except in the Bankruptcy Courts. That has now, to a limited extent, changed.

The Crumbling of DOMA on Same Sex Couples

Filing Bankruptcy

For a long time, even in states that allowed same sex marriage, the ability to file a joint bankruptcy was still not available because of the Federal Defense of Marriage Act. Fortunately, DOMA is not being enforced and many, but not all, of the provisions of DOMA have been rejected by the Supreme Court as unconstitutional. Despite Senate and House bills introduced by Feinstein and Nadler’s respective bills, DOMA has yet to actually be repealed and taken off the books. It is only a matter of time before DOMA will be repealed.

With Eric Holder’s announcement, the Justice Department has declared that same-sex couples must be treated equally under the law – even in states that have not yet ratified same-sex marriage, as long as they were married in a state where it is legal. This radically cuts the cost involved in filing bankruptcy as well as giving same-sex couples the extra exemptions allowed other married couples.

Domestic Partners do Not Have the Same Rights as Married Same Sex Couples Filing Bankruptcy

Sadly, these rights do not appear to extend to domestic partners. Worse yet, assets obtained in California from the individual efforts of either partner during a domestic partnership are community property. What that means is that all of those assets are included in the bankruptcy of either partner just as it would for married spouses but without the benefits.

Does This Announcement Just Affect

Same Sex Couples Filing Bankruptcy?

Obviously, the answer is “No!” This also affects many other rights, such as:

1) The right to inherit from the same sex spouse;

2) The right to visit a same sex spouse in the hospital or in a prison;

3) The right to make end of life decisions;

4) The right to receive social security and other government survivor benefits;

5) The right to file joint income tax returns;

6) The right to not be compelled to testify against one’s spouse; and

many other rights granted by the federal government to all married couples.

So, Do You and Your Same Sex Spouse Need

to Run Out and File Bankruptcy?

Of course not!

We would never advocate filing bankruptcy if it is not needed! Rejoice in your new rights!

However, should you ever find yourself need advice as to options for dealing with debts as an individual, domestic partnership, or one or both married same sex spouses (or straight individuals and spouses for that matter), know that you will find a knowledgeable and caring bankruptcy attorney in Sacramento California ready to answer all your questions.

Please call me, Gary Ray Fraley, Fraley & Fraley, Sacramento Bankruptcy Attorneys at (916) 485-5444 or click here to schedule a free consultation if you need bankruptcy advice.

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