Feds won't fight bankruptcy by married gay couples

[July 09, 2011]  SAN FRANCISCO (AP) -- Federal officials no longer plan to contest joint bankruptcy pleadings brought by legally married same-sex couples, a Department of Justice spokeswoman said Friday.

The Obama administration's recent position is that the federal law forbidding government recognition of same-sex unions is unconstitutional. Justice Department spokeswoman Tracy Schmaler said government lawyers decided this week that letting gay and lesbian couples jointly petition for bankruptcy protection is consistent with that stance.

"The Department of Justice has informed bankruptcy courts that it will no longer seek dismissal of bankruptcy petitions filed jointly by same-sex debtors who are married under state law," Schmaler said.

The shift stems from a case involving two California men who got married when it was briefly legal in 2008 before the state's voters passed a constitutional amendment banning same-sex marriages.

A U.S. bankruptcy trustee initially fought Gene Balas and Carlos Morales' shared Chapter 13 bankruptcy plan on the grounds that the federal Defense of Marriage Act prohibited it. But 20 of the 24 bankruptcy judges in Los Angeles took the unusual step of disagreeing and ruled last month that the act violated the couple's civil rights.

Trustee Peter Anderson subsequently appealed, maintaining President Barack Obama had ordered government lawyers to defend the ban "unless and until" Congress repeals the act or there is a final judicial ruling striking it down.

But Anderson withdrew his objections in a written filing Wednesday. He noted that even a U.S. House of Representatives group that has stepped in to defend the marriage act's constitutionality in other cases had decided against taking part in Morales and Balas' case.

"In light of the decision by the (Bipartisan Legal Advisory Group) not to participate in this appeal and the availability of other judicial fora for resolution of the constitutional question, the United States Trustee has determined that it is not a necessary or appropriate expenditure of the resources of this court and the parties to continue to litigate the appeal," Anderson's office wrote.

Even before the Justice Department arrived at its position this week, another bankruptcy trustee in San Diego already had cited the administration's decision to stop defending the Defense of Marriage Act in a request to withdraw her opposition to the bankruptcy pleading of another married gay couple.

The department's change in policy already has provided the basis for the government to drop its opposition to an attempt by a same-sex couple to seek joint bankruptcy protection in New York state.

"By having the department change its policy nationwide in response to Gene and Carlos' case, we basically accomplished what it would normally take a Supreme Court ruling to achieve," Robert Pfister, a lawyer for the Los Angeles couple.

Balas, 42, a freelance economics writer, and Morales, 46, a graphic designer, said Friday that having the government recognize their marriage for purposes of declaring bankruptcy has practical and profound implications. They will not have to pay extra court fees to file separate petitions, nor go through the exhausting task of trying to untangle their financial lives, which include joint bank accounts, joint debts and jointly owned real estate.

He said, however, that as long as the Defense of Marriage Act and state-level same-sex marriage bans remain in effect, he and his husband are not truly equal. When he was considering taking a job in another state, for instance, he had to consider if their marriage would be recognized for purposes of taxes, hospital visitation, inheritance and other spousal rights.

"If you asked an opposite-sex married couple to move to a state where their relationship would be instantly divorced if they moved from say, California, across the border to Arizona, you would see how DOMA and the patchwork of state laws created a problem for married same-sex couples such as Carlos and myself," he said.

Obama's stance on DOMA also was cited this week by a federal appeals court in San Francisco that ordered the Pentagon to immediately stop enforcing the 17-year-old law that prohibits gay men, lesbians and bisexuals from serving openly in the armed forces.

[Associated Press; By LISA LEFF]

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