Parties to a Civil Union Held Eligible to File a Joint Petition

As reported by Rochelle's Daily Wire on May 23, 2018, Bankruptcy judges in California and Chicago disagree on whether parties to a civil union or domestic partnership are “spouses” eligible to file a joint bankruptcy petition.

In the Chicago case, a same-sex couple filed a joint chapter 13 petition, but the chapter 13 trustee objected to confirmation, contending that the two were not spouses because they did not have a marriage certificate. Arguing that they were not eligible to file a joint petition, the trustee wanted Bankruptcy Judge Deborah L. Thorne to dismiss one of the debtors from the case.

Judge Thorne concluded that the couple’s certificate of civil union put them “substantively in a state of marriage with one another under Illinois law” and were therefore eligible to file a joint plan.

The governing federal statute is Section 109(e) of the Bankruptcy Code, which provides that a joint case is commenced by the filing of a petition by a debtor “and such debtor’s spouse.” Similarly, Section 302(a) says that a joint case is commended by a debtor “and such individual’s spouse.”

In her May 17 opinion, Judge Thorne noted that the Bankruptcy Code does not define “‘spouse’ nor is there a comprehensive federal definition to be found elsewhere.” Citing a 1930 Supreme Court decision, she said that someone “is in a state of marriage” based on that person’s status under state law.

Judge Thorne therefore consulted Illinois law to determine the status of the debtors to one another.

The Illinois Religious Freedom Protection and Civil Union Act provides that the parties to a civil union have “the same legal obligations, responsibilities, protections, and benefits” as those given to spouses.

Since the couple’s status was “substantively identical” to that of married persons, Judge Thorne concluded that they are “spouses within the meaning of that term as used in Sections 109(e) and 302(a),” making them eligible to file jointly.

Judge Thorne cited contrary bankruptcy court authority from California in 2015, noting that the two states’ statutes are “largely similar,” although not entirely identical. The 2015 case in turn was based on a 2005 California appellate court decision saying that the federal government treats civil unions differently from marriages. “This is still true today,” Judge Thorne said.

Judge Thorne said, however, that different treatment by the federal government is not “relevant to the substantive nature of the two debtors’ status under Illinois law.” Likewise, she said it was not relevant that other states might not recognize or give validity to an Illinois civil union. Unlike some other courts, Judge Thorne also declined to make any determination as to whether a civil union has the “same social meaning as marriage or is culturally inferior to marriage.”

Notwithstanding the California decision, Judge Thorne held that whether two people are “in a state of marriage . . . such that they are spouses . . . under federal bankruptcy law depends on the substance” of their status to one another under state law. She said that “state law labels and classifications are not controlling in and of themselves.”

Because the couple’s legal status is “substantively identical” to a marriage, Judge Thorne decided that they were spouses eligible to file a joint chapter 13 case.