Court Rules on Bankruptcy Rights for Married Same-Sex Couples

Can same-sex married couples in Iowa file bankruptcy together? Courts seem to be allowing it. I look at how the issue affects Iowa Bankruptcy.

I knew this day would come. I have been trying to avoid addressing any emotionally charged issues when writing but a fascinating legal ruling has come down from the Bankruptcy Court for the Central District of California. The case presented the issue whether a legally married same-sex couple could file a joint bankruptcy petition. I find this case truly fascinating for two reasons:

  • I love studying constitutional law.
  • I love history.

In order to better understand this ruling the issue needs to be put in context.

Equal Protection Clause

The language that is regularly referred to as the Equal Protection Clause of the United States Constitution is actually made up of parts of two Amendments, the 5th and 14th Amendments. Plainly stated, the 5th and 14th Amendments of the United States Constitution limit the power of the federal (and state) government to discriminate.
The Fifth Amendment requires the federal government not deprive individuals of “life, liberty, or property” without due process. The 5th Amendment has been interpreted to mean that everyone receive equal protection under the law.

The 14th Amendment merely extends the limits on the federal government to the states (This means that the states cannot enact laws legalizing slavery for the same reasons the federal government cannot enact laws legalizing slavery).

For the purposes of this case what you need to know is that Congress is not permitted to pass a law that discriminates based on sexual orientation unless the proposed statute passes a test established by the United States Supreme Court called, “Heightened Scrutiny.” (I am not going to say anymore about heightened scrutiny because I hardly understood it in law school and I am afraid I understand it even less today).

Defense of Marriage Act – DOMA

Notwithstanding all the history surrounding the Equal Protection Clause, in 1996 Congress passed and President Clinton signed into law the Defense of Marriage Act. The Defense of Marriage Act defined marriage as a legal union between one man and one woman. Further, DOMA precluded any state or the federal government from being required to give full faith and credit to any other union. This meant that if a same-sex couple got married in Iowa, Missouri wouldn’t be required to recognize the union and therefore extend rights or benefits to the couple. Finally, DOMA prevented same-sex married couples from receiving any of the benefits under federal law extended to a “traditional” married couple. In other words, under DOMA, same-sex married couples can’t file joint tax returns, received VA benefits, receive Social Security Benefits, or be permitted to file a joint bankruptcy petition.
Nobody really took a hard look at the DOMA legislation after it was passed because when it was passed there were no legalized same-sex marriages in the United States. This was one of those statutes that was sort of “out of sight, out of mind.” We all know what happened next. Many states including California and Iowa began examining state laws that were on the books defining marriage. Some states went as far as introducing legislation to legalize same-sex marriage (Note – the legislature in Iowa has never introduced legislation that would legalize same-sex marriage. The Iowa Supreme Court was asked in a court case to determine the constitutionality of the Iowa marriage statute. The Iowa Supreme Court merely found the language to be unconstitutional). All of a sudden DOMA became a big deal.

Present Day

When the State of Iowa began to recognize same-sex marriages it became clear that there was going to be ramifications in bankruptcy court. I personally contacted the United States Trustee’s Office and inquired as to how the government was going to deal with same-sex couples, who were legally married, filing joint petitions for bankruptcy relief. I was informed that the United States Government’s position was to vigorously object to the filing of joint bankruptcy petitions by same-sex married couples and further the Government would strenuously defend DOMA.

Recently in the Bankruptcy Court for the Central Division of California the Court was presented with an objection by the United States Trustee’s Office (representing the United States of America) in which the UST argued that a same-sex married couple should not be granted a discharge in bankruptcy court because the bankruptcy code only provides for married couples to file a joint petition and under DOMA this couple was not married. After considering each side’s argument, the judge ruled that DOMA violated the Equal Protection Clause of the United States Constitution. Therefore, the judge said that same-sex married couples were entitled to file joint bankruptcy petitions just like “traditional” married couples. The judge’s ruling was interesting for two reasons:

  • Historically joint petition cases that did not involve a legally married man and woman did not fare well. These cases included a man who wanted to file a joint petition with his corporation, a co-habiting, but unmarried, heterosexual couple, and a same-sex married couple from Canada.
  • The judge asked his fellow bankruptcy judges in the Central District of California to sign his ruling with him even though it appears none of the other judges heard evidence or arguments in the case. 20 of the 24 judges agreed to sign the ruling. This seemed somewhat unorthodox to me.

What Does This Mean for Iowa Bankruptcy

Iowa Courts are not required to follow the rulings of courts in the Central District of California. If this issue is presented to the bankruptcy court in Iowa, the Court can either adopt the ruling or reject the ruling handed down by California Court. The Iowa Court could perhaps develop an entirely different holding but that doesn’t seem likely. In light of the recent ruling and other factors developing in the legal realm, I believe that the Bankruptcy Court in Iowa would likely rule the same way as the Bankruptcy Court in California.
I would suggest there is no harm in trying to file a joint bankruptcy petition in Iowa if a same-sex married couple wished to do so. The worst case scenario would be that the court could make each file his or her own petition.

To further discuss this issue or have a copy of the case that has been discussed emailed to you please contact Marks Law Firm. It is the policy of Marks Law Firm to show respect for the opinions of each person. At the same time, each member of Marks Law Firm asks that you show the appropriate respect for our views. Discussion of emotionally charged issues is part of what makes our society great. We encourage you to join the discussion.

Contact Marks Law Firm to make an appointment for a free consultation to discuss your options for filing bankruptcy and to better understand how to deal with your creditors.

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Comments 1

  • Hello, I am a gay man married last may in Washington D.C. To my husband. Soon after our wedding, we discovered our business partners had not been holding up their part in the business. After lots of soul searching we decided to file bankruptcy. We contacted our attorney and went over what we were doing, and how we got there. We told him about our same-sex marriage and ask him if it would be a problem. He said in his eyes we were married. I had to explain to him about the DOMA. At that point he said in his eyes we were married and that we would proceed as such. We filed jointly. Soon we had a meeting with the trustee, and he did ask about it. We presented him with the marriage certificate and my attorney explained that we were legally married in D.C. That was the only time it questioned. We had a discharge of our debts November 22, 2010. This was done the Texas. While it was not something we are proud of, we are glad that the courts did allow it to be jointly filed. It saved us time and money.

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