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Can same-sex couples file for bankruptcy protection jointly?

This question arises within the context of a much larger controversy. I won't discuss that larger controversy except insofar as it has relevance to the question at hand. To put things in context, it helps to have a little background - statutory, and otherwise.

I. Joint Bankruptcy Filings

As you may already know, the Bankruptcy Code is divided into chapters, all of which (except for Chapter 12) are odd-numbered (give me a call and I'll tell you why). Chapters 1, 3, and 5 serve as foundational chapters: their content comes along for the ride and is subsumed into any bankruptcy you file. Thus, for example, if you file for either Chapter 7, or Chapter 13, relief, you are simultaneously filing under Chapters 1, 3, and 5.

Individual cases under any chapter are therefore filed pursuant to 11 U.S.C. § 301, and joint cases are filed pursuant to 11 U.S.C. § 302(a), which provides in relevant part (with emphasis added): "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." Therefore, according to this Code section, any two people who are not married to each other cannot jointly file for bankruptcy protection. They can, of course, file two separate bankruptcies as individuals, but in so doing they incur twice the cost of filing a single bankruptcy.

II. The Defense Of Marriage Act

For reasons connection with the aforementioned "much larger controversy", on September 21, 1996 President Clinton signed the Defense of Marriage Act ("DOMA"), which states (with emphasis added):

In determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States, the word "marriage" means only a legal union between one man and one woman as husband and wife, and the word "spouse" refers only to a person of the opposite sex who is a husband or a wife.

1 U.S.C. § 7.

Applying this statute to the restrictive language in 11 U.S.C. § 302(a) - which is part of the Bankruptcy Code, which is an act of Congress - leads to the conclusions that: (1) For federal law purposes (the Bankruptcy Code is federal law) same-sex couples cannot be considered married, and (2) same-sex couples cannot file for bankruptcy protection jointly.

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If, on the one hand, DOMA does not conflict with the U.S. Constitution, then it is constitutional - even if it conflicts with the constitution of one (or more) of the states (see U.S. Const., art. VI.). If that is the case, then a same-sex couple can never file for bankruptcy protection jointly because they can never be married for federal law purposes, and can never have a spouse - again, for federal law purposes - even if they have been legally married under the law of one of the states.

On the other hand, if DOMA does conflict with the U.S. Constitution, then it is unconstitutional - even if it is popular. If that is the case, then it is arguably the case that a same-sex couple who is legally married under the laws of a given state can file jointly.

III. New Legal Developments

A. The First Case On Point: Joint Filing Is Not Permitted

The first court that addressed the question of same-sex joint filing appears to have been the U.S. Bankruptcy Court for the Western District of Washington. In that case. a same-sex couple filed a joint Chapter 7, and the Court filed an Order to Show Cause for Improper Joint Filing of Unmarried Individuals ("OSC"). The Debtor filed a response, as did the Office of the U.S. Trustee ("UST"). The Court held:

. . . DOMA simply codified that definition of marriage historically understood by society. See Adams, 486 F.Supp. at 1123 (observing that marriage historically has been defined as the union between persons of different sex). . . . This Court concludes that DOMA does not violate either the Due Process or Equal Protection Clause of the Fifth Amendment. . . . The Court concludes that DOMA does not violate the principles of comity, or the Fourth, Fifth, or Tenth Amendments to the U.S. Constitution. The Debtors' petition in bankruptcy shall be dismissed on September 3, 2004, unless the Debtors have filed a motion to bifurcate prior to said date.

In re Kandu, 315 B.R. 123, 148 (Bankr. W.D. Wa. 2004) (available at http://scholar.google.com/scholar_case?case=11621320246049853361&q=315+B.R.+123&hl=en&as_sdt=2,5).

B. The Central District Of California: Joint Filing Is Permitted

Very recently, Judge Thomas Donovan, one of the U.S. Bankruptcy Judges in Los Angeles, held in a Chapter 13 case in which the UST had filed a motion to dismiss:

The Debtors have demonstrated that DOMA violates their equal protection rights afforded under the Fifth Amendment of the United States Constitution, either under heightened scrutiny or under rational basis review. Debtors also have demonstrated that there is no valid governmental basis for DOMA. In the end, the court finds that DOMA violates the equal protection rights of the Debtors as recognized under the due process clause of the Fifth Amendment. . . . For the reasons stated herein and in the Debtors' Opposition to the Motion and Debtors' supporting authorities, the Motion to Dismiss Debtors' chapter 13 case based on § 1307(c) is denied.

In re Gene Douglas Balas and Carlos A. Morales, Case No. 2:11-bk-17831-TD, (Bankr. C.D. Cal. June 13, 2011) (available at http://scholar.google.com/scholar_case?case=9039191776846115550&q=In+re+Gene+Douglas+Balas+and+Carlos+A.+Morales&hl=en&as_sdt=2,5).

Interestingly, 20 of the bankruptcy judges in the Central District of California signed the order issued by Judge Donovan. This is highly unusual; indeed, I am unaware of any other non-appellate bankruptcy cases in which multiple bankruptcy judges have signed the same order.

What can we conclude from these two cases. Less than you might think. First, each case was at the Bankruptcy Court level, meaning that no appellate court has considered the matter. Second, no other judges are bound to follow either decision because they have no precedential force. Third, if a court whose rulings have precedential force in the Ninth Circuit hands down a decision, it will make both of these decisions irrelevant.

C. The Position Of The U.S. Justice Department

In both of the cases we just discussed, the UST participated in the process of seeking dismissal. The UST is a subdivision of the U.S. Justice Department ("DOJ"). Therefore, if the DOJ decides against opposing joint same-sex filings, the UST will no longer seek to dismiss such cases.

On June 21, 2011 U.S. Attorney-General, Eric Holder, stated that the DOJ would no longer defend DOMA (see http://www.latimes.com/business/la-fi-hiltzik-20110621,0,1097806.column for details). In practical terms this means that since the DOJ will not defend DOMA, it will not oppose joint same-sex bankruptcy filings, so neither will the UST.

Does that settle the question? Not quite. In the Kandu case it was the judge who initially issued the OSC. Although the UST filed a response, it was not required to do so. Thus, the case could have been dismissed by the judge without the participation of the UST or anyone else. Therefore, a judge in the Central District of California could dismiss a joint same-sex filing, without the participation of the UST, and without the imprimatur of the DOJ. Since there were some Central District judges who did not sign Judge Donovan's order, it remains to be seen what will happen is such a case ends up in one of their courts.

In sum, stay tuned for further developments.

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