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Same-sex couple files for joint chapter 13 bankruptcy

A same-sex couple recently filed a joint bankruptcy petition in Ohio's southern neighboring state. The two were married in New York this past may. But they live in Kentucky, where same-sex marriages are not recognized. The couple filed a joint chapter 13 bankruptcy petition and filed a proposed chapter 13 bankruptcy plan, which reportedly has been confirmed in the bankruptcy proceeding.

The case has raised some political debate in our neighboring state, since Kentucky does not recognize same-sex marriages. However, bankruptcy proceedings are federal issues. The current administration indicated previously that it will not continue to defend the federal Defense of Marriage Act.

In July 2011, The U.S. Justice Department indicated that the federal policy will extend to the U.S. Trustee's Office. The U.S. Trustee is part of the Justice Department and oversees bankruptcy proceedings, including chapter 13 bankruptcy cases.

The Justice Department says that the U.S. Trustee will not oppose joint bankruptcy cases filed by same-sex couples who are married.

The Kentucky couple had fallen into financial distress after investing in a downtown business in Louisville. They ran the market from 2006 to 2009, but had to close in May 2009. They say that the banks refused to consolidate loans on the business, and feared that creditors would seek payment out of their personal assets.

The couple listed assets of $414,000 and debts totaling more than $474,000. Under chapter 13, the couple will be making payments into the chapter 13 payment plan of $398 each month for five years. At the end of the payment plan, any outstanding unsecured debts will likely be discharged if the bankruptcy plan is followed properly. Sources say that unsecured creditors will receive about five cents on the dollar that the couple owes on the debt.

Source: The Courier-Journal via, "Ky. gay married couple files joint bankruptcy," Andrew Wolfson, Aug. 8, 2012

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