Gay and Lesbian Couples Face Barriers Real to Bankruptcy Relief Skip to main content

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Gay and Lesbian Couples Face Barriers Real to Bankruptcy Relief


Recent gains for marriage equality in states like Iowa and New Hampshire have been met by a lot of legal questions for those who are actually considering marriage with their gay and lesbian partner. Similarly, recently proposed legislation that would prohibit marriage between gay and lesbian couples in North Carolina is shedding a new spotlight on the confusing differences in relationship recognition in state and federal laws and the true legal challenges facing these couples throughout the Tar Heel State and entire country.

These legal hurdles for gay and lesbian spouses include added barriers when these couples seek the benefits of bankruptcy. Because the federal government crafts bankruptcy legislation and bankruptcy law is decided on the federal level—and yet, bankruptcy law is regulated on the state level—differences can emerge in the way cases are handled, especially when gay and lesbian couples are involved.

So what’s the real difference? Well, married debtors can file their cases jointly with one trustee, one filing fee, and one total case. Debtors can seek dissolution of joint debts as well as debts they hold only in their name. And federal laws allow married debtors to keep enough property to support both parties. To be a joint case, the debtors need only be legally married. And, under the federal Defense of Marriage Act (“DOMA”), legal marriage currently means one man and one woman. Because same-sex marriages aren't recognized at the federal level, gay married couples can’t benefit from and of these bankruptcy protections.

Beyond inequality in bankruptcy procedures, there are basic economic inequalities that make it more difficult for same sex couples to successfully complete a Chapter 13 bankruptcy plan or enjoy their fresh start post-bankruptcy. What are the economic inequities? A sampling include that under DOMA, tax breaks that benefit married couples don’t apply to same-sex spouses because their unions remain unrecognized. The same realities apply when it comes to health insurance: many insurers who cover spouses and families, don't provide coverage for same-sex partners. And if a same-sex spouse does take ill, in addition to have trouble receiving benefits, the caretaking partner can lose their job. The federal Family Leave Act states that an employee cannot be fired for taking a six-week leave to care for a sick family member or spouse; unfortunately because same-sex marriages aren't recognized at the federal level, employers aren’t obliged to follow it when it comes to their gay and lesbian employees.

In these tough economic times, this could mean these gay and lesbian couples accrue more debt and therefore may need the safe havens of bankruptcy more than anyone. The state of marriage equality is not yet where it should be in the United States, and this seriously affects the legal rights of gay and lesbian families. But until the law changes, same-sex couples need special help in the handling of their cases.

If you live in North Carolina where same-sex marriage is not legal, but are still considering bankruptcy, the bankruptcy professionals at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to +1-919-646-2654, or during the off hours, you can make your own appointment right online at Simply click on the yellow “FREE Consultation Now” button.

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