After DOMA: Bankruptcy

7/28/2019 After DOMA: Bankruptcy

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Tis series of fact sheets produced together by:

American Civil Liberties Union | Center for American Progress | Family Equality Council | Freedom to Marry | Gay & Lesbian Advocates & DefendersHuman Rights Campaign | Immigration Equality | Lambda Legal | National Center for Lesbian Rights | National Gay and Lesbian Task Force | OutServe-SLDN.

BANKRUPTCYBankruptcy is a legal process designed by Congress to give debtors a resh start rom debtsthey cant aord to pay. It allows them to discharge, or eliminate, certain debts, and preventscreditors rom taking urther action to collect on those debts. Tere are specic rules abou

which assets you can keep i you go through bankruptcy, and which debts you can discharge

Some kinds o debt are never dischargeable. I you are married, you have dierent options obankruptcy lings. Now that the Deense o Marriage Act (DOMA) has been struck downthis guidance provides basic inormation about bankruptcy lings, how being married mattersin bankruptcy proceedings, and what married same-sex couples can expect. Consult with proessional bankruptcy advisor or inormation and advice about your specic situation.

What kinds o bankruptcy proceedings are available to individuals?

Married people can le or bankruptcy either singly or jointly (where both spouses letogether). Businesses also can le or bankruptcy. Tere are many dierent kinds o bankruptcyproceedings. Chapter 7 and Chapter 13 are most commonly used by individuals.

In a Chapter 7 bankruptcy, the debtors assets are sold and any proceeds are used to repaycreditors. Te debtor is allowed to keep certain property, known as exempt property. Wha

property counts as exempt is a matter o either state or ederal law. With some importanexceptions, debts will be discharged, even i there are no non-exempt assets. Recent changeto the bankruptcy laws mean that i a debtors income (including a spouses income) is above acertain amount, a Chapter 7 ling will be converted to a Chapter 13 ling.

Under a Chapter 13 bankruptcy, you will be required to ollow through on a court-approvedpayment plan to repay your debts. You will be protected rom creditors while the plan is ineect, and how much you have to repay will depend in part on how much o your assets areexempt.

For either kind o bankruptcy, there are limits on how requently you can le.

Because bankruptcy can damage your credit and have other serious consequences, it ivery important to ully understand the advantages and disadvantages o fling. For morinormation, consult with a reputable bankruptcy attorney.

How can marriage or having been married impact a bankruptcy fling?

Married couples can le a joint petition or bankruptcy. Tis means that your combinedproperty and debts are part o the same bankruptcy, and the debts o both spouses aredischarged. Filing a joint bankruptcy rather than two individual bankruptcies may result innancial savings, since ling bankruptcy requires paying a ling ee to the court, and may alsoinvolve paying or a lawyer. It also may simply be more convenient to proceed in a single lingrather than two bankruptcy lings.

Tere are other ways that marriage matters in a bankruptcy ling. I you are married, youspouses income will be included in determining whether you can le or Chapter 7 bankruptcy

The Supreme Court victory in United States v. Windsorstriking down the discriminatory ederal Deense o Marriage Act (DOMA) afrms that allloving and committed couples who are married deserve equal legal respect and treatment rom the ederal government. The demise o DOMAmarks a turning point in how the United States government treats the relationships o married same-sex couples or ederal programs that arelinked to being married. At the same time, a turning point is part o a longer journey, not the end o the road. There is much work ahead beoresame-sex couples living across the nation can enjoy all the same protections as their dierent-sex counterparts.

Keep in Mind:

Te Supreme Courts ruling in Windsor applies only to the ederalgovernment. It does not change discriminatory state laws excludingsame-sex couples rom state-conerred marriage rights.

Te ruling striking down DOMA will not be eective until 25 days

rom the decision. Even when eective, ederal agencieslargebureaucraciesmay need and take some time to change orms,implement procedures, train personnel, and efciently incorporatesame-sex couples into the spousal-based system.

Until same-sex couples can marry in every state in the nation, therewill be uncertainty about the extent to which same-sex spouses willreceive ederal marital-based protections nationwide. For ederalprograms that assess marital status based on the law o a state thatdoes not respect marriages o same-sex couples, those state laws

will likely pose obstacles or legally married couples and survivingspouses in accessing ederal protections and responsibilities.

Securing air access to ederal protections that come with marriageor all same-sex couples in the nation will take some time and work.In some situations, it may require Congressional action or ormalrule-making by agencies.

Beore making a decision, it is essential that you consult an attorneyor individualized legal advice. Tis is particularly important orpeople who are on certain public benets, as getting married may

jeopardize your eligibility without providing you the ull measureo protections other married couples enjoy. In addition, couples

who travel to another place to marry and then return to live in astate that does not respect their marriage may be unairly unableto obtain a divorce, which can lead to serious negative legal andnancial consequences. People must make careul decisions whenand where to marry, even as we work together to end this injustice.

We are committed to winning universal access to ederal maritalprotections or married same-sex couples through ongoing publicpolicy advocacy, and, where necessary, strategic litigation. Contactour organizations i you have questions, or updates and to learnmore about what you can do to achieve ull equality or those whoare LGB.

Tis Guidance is intended to provide general inormation regardingmajor areas o ederal marriage-based rights and protections based onhow the various ederal agencies have administered ederal benets. Itshould not be construed as legal advice or a legal opinion on anyspecifc acts or circumstances, and does not create an attorney-client

relationship. Past practice is no guarantee o uture developments.While laws and legal procedure are subject to requent change anddiering interpretations in the ordinary course, this is even more truenow as the ederal government dismantles DOMA and extends ederalprotections to same-sex couples. None o the organizations publishingthis inormation can ensure the inormation is current or be responsibleor any use to which it is put.

No tax advice is intended, and nothing therein should be used, andcannot be used, or the purpose o avoiding penalties under the InternalRevenue Code.

Contact a qualied attorney in your state or legal advice about yourparticular situation.


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AFTER DOMA: WHAT IT MEANS FOR YOU BANKRUPTCY 2



And i you were married and get divorced, debts owed or domestic supportobligations (such as alimony, maintenance or support) are non-dischargeableand get priority in bankruptcy, which means they will get paid o rst i thereare assets to pay them.

While it may make sense or a married couple to le jointly in many cases,sometimes, you or your spouse might be better o ling alone. I only yourspouse has signicant debt, or example, it might make more sense or yourspouse to le individually. I you have signicant joint debt, on the other hand,

ling only one petition could mean that creditors are still ree to go ater theother spouse. Te rules dier somewhat in community property states. Formore inormation on how to assess whether you are better o ling singly or

jointly, consult with a reputable bankruptcy attorney.

Who will be recognized as married or bankruptcyfling purposes?

Te ederal bankruptcy courts administer bankruptcy proceedings. Tese aregoverned by the Bankruptcy Code, but state law may determine which assetsare part o the bankruptcy estate, and which are exempt (which means youget to keep them). Te bankruptcy law says that which states law applies todetermine your exemptions depends on how long you have lived in the statebeore you le or bankruptcy.

If you live in a state that respects your marriage: Now that DOMA hasbeen overturned, married same-sex couples living in states that respecttheir marriages will be considered married or bankruptcy purposes.

If you always lived in a state that doesnt respect your marriage: Tereis no ederal statute or regulation that addresses how the bankruptcy courtsare to determine whether a marriage is valid. You may still be recognized asmarried or bankruptcy purposes, although it is not entirely clear how statelaws relating to exemptions will apply to joint lings by married same-sexcouples. Tis may take some time to sort out. In our mobile society, itmakes sense or the ederal government to recognize all marriages that werevalid where entered. We are working to ensure that the ederal governmentrespects married couples wherever possible. I you encounter problems,contact one o the legal organizations listed below.

If you married and lived in a state that respected your marriage butthen moved to a state that does not respect your marriage: Tere isno ederal statute or regulation that addresses how the bankruptcy courtsare to determine whether a marriage is valid. You may be recognized asmarried or bankruptcy purposes, and depending on when you moved,the law o your ormer home state might apply to determine yourexemptions. Again, it may take some time or the bankruptcy courts tosort out how they will handle joint lings by married couples in states thatdo not respect marriages o same-sex couples. I you encounter problems,contact one o the legal organizations listed below.

How can I fnd out more about how bankruptcy works, and

how to fle?One place to start is this website rom the ederal courts, which administerbankruptcies:

www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics.aspx

For more inormation, see:

http://consumer.abi.org/consumers

For inormation about how to le, see:

www.uscourts.gov/FormsAndFees/Forms/BankruptcyForms.aspx

FOR MORE INFORMATION, CONTACTAMERICAN CIVIL LIBERTIES UNION

aclu.org/lgbt

NATIONAL CENTER FOR LESBIAN RIGHTS

nclrights.org

LAMBDA LEGAL

lambdalegal.org

GAY & LESBIAN ADVOCATES & DEFENDERS

glad.org
http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics.aspxhttp://www.uscourts.gov/FormsAndFees/Forms/BankruptcyForms.aspxhttp://www.aclu.org/lgbthttp://www.nclrights.org/http://www.lambdalegal.org/http://www.glad.org/http://www.glad.org/http://www.lambdalegal.org/http://www.nclrights.org/http://www.aclu.org/http://www.aclu.org/lgbthttp://www.uscourts.gov/FormsAndFees/Forms/BankruptcyForms.aspxhttp://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics.aspx


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After DOMA: Bankruptcy

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