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Gay Couple Ruled Allowed to File a Joint Bankruptcy in California

Posted on Jun 17, 2011
Individuals can file a bankruptcy singly, or jointly with a spouse, paying the same filing fee, and usually the same attorney fee, as if they had filed singly. The question becomes, with same-sex marriage being such a hot topic, can gay couples file joint bankruptcies? The definition of the word "spouse" in the bankruptcy code comes from the Federal Defense of Marriage Act (DOMA), which states that it is "a person of the opposite sex who is a husband or a wife." 1 U.S.C. § 7. Therefore, one would think that the answer is "no."

However, according to 20 bankruptcy judges in the Central District of California, the answer is "yes." In the case of In re Balas and Morales, the U.S. Trustee moved to dismiss the joint chapter 13 filing of Gene Balas and Carlos Morales because neither met the definition of "spouse" under DOMA, and as such, the cases had to be either dismissed or severed and administered as separate cases. The matter was heard, and on June 13, 2011, the court held that DOMA was unconstitutional in its definition of the word "spouse" and deferred to state law on the issue. The court stated that the debtors had been legally married under California law, which should be controlling, and as such, the bankruptcy filing could proceed as is.

This ruling is by no means authoritative in other federal districts, but if the logic is followed, it would still not spread very far. As of this writing, there are 5 states (Connecticut, Iowa, Massachusetts, New Hampshire, and Vermont) plus Washington DC, and many foreign jurisdictions, where same-sex couples can legally marry. In addition, there are 3 more states (New York, Rhode Island and Maryland) that recognize same-sex marriages validly performed elsewhere. Thus, ironically, the ability to file a joint petition in bankruptcy would be determined by state, and not federal, law.

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