Bankruptcy Laws Change for Same-Sex Married Couples In Massachusetts

This past Thursday (7/8/10), a Massachusetts federal judge decided that a law barring the federal government from recognizing same-sex marriage is unconstitutional. Follow this link to read more about the decision. The decision will make obtaining bankruptcy relief easier and less expensive for same-sex married couples in Massachusetts.

Prior to the decision, same-sex married couples in need of a Chapter 7 or Chapter 13 bankruptcy filing could not file a joint bankruptcy petition. This was because bankruptcy is a federal legal proceeding, and under the federal Defense of Marriage Act, or DOMA, same-sex marriage was not recognized. As a result, a same sex married couple could not take advantage of the higher median income limit extended to 2-person households. This meant fewer gay and lesbian debtors could avoid the means test than their heterosexual counterparts. Another problem was that a same-sex married couple had to file two individual bankruptcy petitions, pay two filing fees, and typically incur higher legal fees than a heterosexual married couple.

It is not clear whether or not the U.S. Department of Justice is going to appeal the decision. If the decision is upheld on appeal, or not challenged at all, all married couples in Massachusetts will be treated equally throughout the bankruptcy process. The different treatment described above will be no more. The federal bankruptcy court will need to respond to the decision by updating its petition, forms and schedules to accommodate same-sex marriage terms, as many documents use the traditional labels of "husband" and "wife." Perhaps they will use the generic terms "debtor" and "co-debtor."

Frequently we are reminded that the only constant is change. This recent decision changes bankruptcy law in Massachusetts, and sets the stage for change in other jurisdictions. The decision may be upheld or overturned. Whatever the outcome, should financial distress take hold of you or someone you care about, make sure you/they seek counsel from an experienced bankruptcy attorney who remains current in this dynamic and important area of the law.

Matthew S. Rousseau, Esq.
Morrison Rousseau, LLP
www.WorcesterBankruptcyAttorney.com