Domestic partnership and bankruptcy: An update

UPDATE: As of August 1, 2013, same-sex couples can now file bankruptcy together in Minnesota. In an earlier post, we explained that in Minnesota, same-sex domestic partners cannot file a joint case in bankruptcy, even if they were married in another state. This is still true.

However, in states where same-sex marriage is legal, the pendulum may start to swing the other way. In the Central District of California, 20 of the 24 bankruptcy judges signed onto an opinion ruling that the Defense of Marriage Act is unconstitutional insofar as it prevents same-sex legally-married couples from filing joint bankruptcy petitions.

This is not likely to have an immediate effect outside the Central District of California (Los Angeles and the surrounding area) but if other courts follow suit, it may eventually mean that same-sex couples who were married in a state that recognizes same-sex marriage may file joint petitions in any state.

While this is good news in terms of equal protection, it may be both a blessing and a curse under bankruptcy law. There are advantages to filing jointly, such as the fact that you only have to pay one filing fee to the court. The downside? Under current bankruptcy law, same-sex partners are treated like roommates, so the filing partner does not have to include their non-filing spouse's income on the means test. If partners were treated the same as married couples, then we would need to count the non-filing partner's income on the means test, then subtract amounts that don't go to support the household. It may seem nuanced, but it's kind of a big deal.

Even though the law hasn't changed here in Minnesota, we still stand by our principles. We offer clients in domestic partnerships the same discounted price that we would offer a married couple filing bankruptcy, even though we have to file two separate cases.