It is a poorly kept secret that states are divided on the issue of same sex marriage. Most states, like Virginia, do not recognize same sex marriage. Until recently the federal government did not either. However, the 2013 Supreme Court case U.S. v. Windsor changed that. In U.S. v. Windsor the Supreme Court struck down the portion of DOMA, the Defense of Marriage Act, defining marriage as the union between a man and a woman. What does this mean for bankruptcy?
Bankruptcy is an amalgamation of federal and state law. Federal law gives an individual, or a married couple, the right to file. State law governs property rights and exemptions. I do not see how a married same sex couple could file a joint bankruptcy before the repeal of the definition of marriage contained in DOMA. However, now that the definition of marriage in DOMA has been repealed, I do not see an issue arising for married same sex debtors filing a joint bankruptcy petition in states that independently recognize same sex marriage. The problems emerge in states that do not recognize same sex marriage.
There are more issues to consider than those that arise under the constitution. For instance, only married couples in Virginia can own property as tenants by the entirety. Because Virginia does not recognize same sex marriage, the tenancy by the entirety exemption cannot apply to same sex couples married in another state. This is unlikely to change soon.
Even if the federal government decided that a same sex couple married in a state recognizing same sex marriage can file a joint bankruptcy in any state, the couple may not be able to avail themselves of the protections the bankruptcy code intended to bestow.
Here is a proposed bill that would fix the issue in Virginia.