Bankruptcy

In Sickness and in Health . . . and in Bankruptcy

by Teresa M. Harkins La Vita

A CA federal bankruptcy court in In re: Balas and Morales became the first since the DOJ's announcement that it would no longer defend the Defense of Marriage Act to rule on the constitutionality of DOMA. The bankruptcy court found that DOMA violates the equal protection rights of a married same-sex couple who filed a joint bankruptcy petition. The DOJ will no longer challenge joint bankruptcy petitions brought by married same-sex couples.

Excerpt:

The bankruptcy process can give a debtor a "fresh start" by allowing the debtor to enter into a repayment plan or liquidate assets to pay debts. Bankruptcy proceedings are governed by federal statutory law and are litigated in federal United States Bankruptcy Courts located in the individual states. One important benefit to bankruptcy is that spouses have the option to file joint bankruptcy petitions.

The Defense of Marriage Act (DOMA), which defines "marriage" as "a legal union between one man and one woman as husband and wife . . . ," has prevented married same-sex spouses from enjoying a multitude of federal benefits typically afforded to a married couple. The benefits denied include Social Security payments and joint federal income tax filing. DOMA has also precluded married same-sex spouses from reorganizing debt through joint bankruptcy petitions.

On February 23, 2011, Attorney General Eric Holder released a statement that the Department of Justice (DOJ) would no longer defend DOMA. However, "the President [] instructed Executive agencies to continue to comply with Section 3 of DOMA . . . unless and until Congress repeals Section 3 or the judicial branch renders a definitive verdict against the law's constitutionality." As members of Congress were then given the opportunity to defend DOMA, shortly after the DOJ's announcement the House Bipartisan Legal Advisory Group (BLAG) of the House of Representatives hired former Solicitor General Paul Clement to defend DOMA in federal court proceedings. Thus it was unclear as of early 2011 whether DOMA would still operate to deny federal benefits to legally married same-sex couples. [footnotes omitted]

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