We often work with same-sex couples dealing with debt. A few tricky issues come up with clients in domestic partnerships that want to file bankruptcy, but for the most part, the bankruptcy law treats them exactly the same as any non-married couples. Here are some questions we get asked a lot:
1. Can we file bankruptcy together? Only married couples can file joint bankruptcy cases. An unmarried couple will need to file separate cases regardless of age, height, star sign, or gender.
2. What if we were married in another state? No dice there. The federal Defense of Marriage Act denies federal recognition of same-sex marriage. So even though same-sex marriage may confer certain benefits in the states where it’s legal, this doesn’t extend to the bankruptcy law.
3. Does my domestic partner count toward my household size on the means test? In determining household size for the purposes of the means test, you can count any person with whom you share a household–even a roommate counts as long as you share household expenses. If you have kids, both partners can count the kids in household size under the means test.
4. Do I have to count my domestic partner’s income toward my ability to pay creditors on the means test? In counting income, we only count a partner’s income if it is paid toward the household expenses of the debtor. This is usually more favorable than the way a married single-filer is treated under the bankruptcy code. If married, you have to add all your spouse’s income as household income, and then subtract any money that does not go into the household as a “marital adjustment” (such as the spouse’s monthly payments to debt in his/her own name). For unmarried couples, all we do is add the portion of the non-filing spouse’s income that is paid toward the expenses of the debtor or his/her dependents.
5. Will our case cost the same as it would if we filed together? Domestic partners the same discounted price that we would offer a married couple filing bankruptcy, even though we have to file two separate cases. The only difference is that because you’d be filing two separate cases, there will be two separate filing fees ($306 per person in a Chapter 7).
There are other issues to watch out for, especially if you and your partner own property jointly. Get in touch for a free consultation if we can help you figure some of these issues out.