Same-Sex Joint Bankruptcy Filing in Kentucky Now Legal

Kentucky is not a state that recognizes same-sex marriage. However, a new ruling by a federal judge found that gay and lesbian couples can file for joint bankruptcy in the state. 2girls.jpg

Our Kentucky Chapter 7 bankruptcy lawyers know that streamlining the process for these families will make it not only less expensive, but also less messy in terms of asset protection. When a couple has joint bank accounts, joint property and joint debt, untangling all that can be quite complex in cases where only one party files — or when a couple must file separately.

There are some cases in which married couples may strategically file separately for varying reasons, but with same-sex couples not given the option, they were forced to file separately and incur twice the cost and twice the hassle.

In Kentucky, voters amended the state’s constitution back in 2004, explicitly defining marriage as between one man and one woman. Further, the federal Defense of Marriage Act also barred same-sex unions from being recognized by the federal government, and that meant in bankruptcy filings.

Bankruptcy is a federal proceeding, guided by federal law. Because both state and federal law barred recognition, same-sex couples were unable to enjoy the same protections under the law as married couples. This meant they were essentially treated under the law as any non-married couple or roommates.

Many had assumed it would remain this way unless the Defense of Marriage Act was repealed. That has not happened. However, U.S. Attorney General Eric Holder announced early last year that the Justice Department would discontinue defense of the Defense of Marriage Act. At the time, Holder cited President Barack Obama’s views that the act violates the U.S. Constitution’s clause for equal protection.

Then in July of last year, the Justice Department made an announcement that the U.S. Trustee, which is the division that enforces U.S. bankruptcy code, would no longer oppose joint bankruptcy filings for same-sex couples.

Since then, the agencies have not kept track of exactly how many same-sex joint bankruptcy filings there have been across the country. However, we do know from research by the Lexington Courier-Journal that the first such case in Kentucky was confirmed at the end of July.

The couple married in New York in May. They filed for a joint Chapter 13 bankruptcy after losing some $200,000 in an investment. One is now unemployed and the other works with a wireless phone company. A joint filing, they said, managed to save them several hundred of dollars in filing fees, as well as helped prevent them from having to divvy up their possessions and assets prior to filing.

Federal bankruptcy laws are powerful tools, which can help a family regain solid financial ground and a quality of life that makes each day enjoyable again. Making the same rules applicable to same-sex couples will ensure those benefits are available to families of all shapes and sizes.

If you are considering a Kentucky bankruptcy, contact the Schwartz Bankruptcy Law Center at 866-270-4495 for a free and confidential consultation.

Additional Resources:
Kentucky Male Couple’s Joint Bankruptcy Gives Legal Weight to Their N.Y. Marriage, By Jason St. Armond, Edge Boston

More Blog Entries:
New Federal Rules Aim to Curb Kentucky Foreclosures, Aug. 29, 2012, Louisville Bankruptcy Lawyer Blog

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