On June 26, 2013, the U.S. Supreme Court issued a 5-4 ruling striking down the federal Defense of Marriage Act (DOMA). The law denied federal benefits to same-sex couples including those legally married in states that permit such unions. That meant that filing for joint bankruptcy – that is, filing a single petition instead of two individual petitions, thereby saving money on legal fees and in other ways – was usually not an option for legally-married same-sex couples.
Bankruptcy in the U.S. is subject to federal law – the U.S. bankruptcy code. The law varies somewhat from state to state, but bankruptcy cases in the U.S. are heard in federal court. That means bankruptcy cases were subject to DOMA. The prohibition of joint bankruptcy filings by same-sex married couples was not ironclad, however.
In fact, determining whether such a couple could file jointly has been a confusing matter for some time. Under the direction of presiding judges, some bankruptcy courts have allowed joint petitions by same-sex married couples. In June, 2011, a California bankruptcy court ruled that DOMA violated the U.S. Constitution’s guarantee of equal protection. In an unusual move, 20 bankruptcy judges signed onto a ruling rejecting the U.S. trustee’s office’s request that the joint bankruptcy petition of two legally-married California men be dismissed. Prior to that, a very small number of judges had called DOMA unconstitutional.
Just three weeks later, the U.S. Department of Justice announced that it would stop opposing joint bankruptcy filings of same-sex married couples.
But that still did not mean that those couples could count on being able to file jointly. Individual bankruptcy judges exercise great discretion in how to handle cases presented to their courts. They need not heed the rulings or opinions of other bankruptcy judges.
Daniel Maltbie and Garry Houston made news recently when they filed for joint bankruptcy. Having married in Vermont in 2003 and subsequently moved to Florida, they anticipated a rejection of their petition by judges sympathetic to DOMA and to Florida’s non-recognition of same-sex marriages. The couple and their attorney had indicated a willingness to appeal the case in the event their filing was dismissed.
Following the Supreme Court ruling in June striking down DOMA, Maltbie and Houston and many other couples in similar situations expect their cases to proceed smoothly. The decision affects many federal benefits in addition to joint bankruptcy filings, and it remains to be seen how quickly and completely it will be reflected in the government’s laws and day-to-day practices.