California Bankruptcy Court Rules on Domestic Partnerships

In a recently decided case, the Bankruptcy Court for the Central District of California disallowed a joint petition for bankruptcy by a couple in a domestic partnership. In his ruling, the judge explained that a couple registered with the state as domestic partners are not spouses for purposes of the Bankruptcy Code.

The case, In re Villaverde, involved two women who registered as a domestic partnership under California law in 2004. They testified to the bankruptcy court that if same-sex marriage had been legal in 2004, they would have been married in lieu of registering as a domestic partnership. Of course California legalized same-sex marriages in 2013, after a court ruled that the state could not discriminate against same-sex couples, and then same-sex marriages were made lawful nationwide in 2015 after the U.S. Supreme Court’s landmark decision.

Despite these ruling on same-sex relationships, those who took advantage of state laws allowing for alternative living arrangements for same-sex couples were largely left out of the many court decisions. This is what the couple in this case found out after trying to file bankruptcy as spouses to take advantage of bankruptcy laws.

Filing Bankruptcy as a Couple

Section 302 of the Bankruptcy Code gives an individual and that individual’s spouse the right to file for bankruptcy. 11 U.S.C. § 302(a). It was this section of the bankruptcy code that the couple in this case tried to take advantage of before the trustee in the case moved the court to disregard their petition. The trustee argued that as a domestic couple the two women did not qualify as spouses under the terms of the bankruptcy code.

The court in this case took a sympathetic posture with the couple, but eventually ruled that there was no basis in the law for describing two people in a domestic partnership as spouses. In its ruling, the court went over the history of the bankruptcy code and same-sex married couples to reach its decision. That history includes different courts who have granted same-sex married couples eligibility under the code, including the SUpreme Court’s ruling that overturned the Defense of Marriage Act as unconstitutional.

Even after acknowledging the favorable decisions same-sex couples have recently enjoyed in federal courts, this court looked to the ordinary meaning of spouse to determine whether this couple should be treated as spouses under the bankruptcy code. The ordinary meaning as defined by dictionaries is a couple who have entered marriage, or a husband or wife. As a result, the court determined that this couple could not qualify as spouses under the bankruptcy code. But the court did note that the couple could get married now, and then be given the same benefits as any other married couple.

This case exemplifies just how much of bankruptcy law is determined by the decisions of judges. This is particularly true, as it was in this case, when the bankruptcy code does not clearly define a term, or when a particular situation has not arisen in the past. Each bankruptcy case is unique and requires the professional advice and counsel of a true California bankruptcy attorney. If you have questions about whether you should file a California bankruptcy, contact us. At The Bankruptcy Center we look at the facts of each case individually and give the advice and counsel that each case deserves.