Gay Marriage and Gay Bankruptcy in New York
First of all, while we’re typically never political here, and this may cost us some clients, let me just say that I’m absolutely delighted and proud that our legislators passed this landmark legislation in New York. I’ve had the honor and privilege of working with many gay and lesbian clients for both Chapter 7 Bankruptcies and Real Estate closings in New York, and I’m so very happy they finally have the long overdue opportunity to get married.
Since this past Friday, throngs of people have marched into my office and said “Daniel, now that we can legally get married, what in the world happens if we both file Bankruptcy?” That didnt happen. No one came by. I was in Newport, Rhode Island (great lobster roll). But they will. And the answer is, the field of Bankruptcy will likely get a bit more complicated now. They’ll be some questions in the coming months about the process, but heres what I imagine will happen. Before, if you were a gay couple that wanted to file Bankruptcy, you would simply list yourselves as roommates for purposes of the Means Test and whatever the partners contribution was to the household would be listed. Now, both gross incomes count. Shaking your head and asking yourself why you’re reading a Bankruptcy Blog on a Monday? Heres what I mean in simpler terms:
#1- Before Friday: Gay couple lives together. One partner wants to file Bankruptcy. Filers income counts towards the Means Test. We also then add in the monthly contribution and NOT the gross income of the other partner.
#2- Now (or after July 30th): Gay couples lives together and are married. One partner wants to file Bankruptcy. BOTH partners income now count towards the Means Test as opposed to simply (My partner contributes $700 for the rent and thats all the money Im putting down for the Means Test)
What implications does that have? Realistically it may mean that while you may have passed the means test before, you may not now if you do get married. KEEP THAT IN MIND if you’re deep in credit card debt. Same goes for assets, tax returns, etc. Its all going to be treated that same as if you were a heterosexual married couple for the purposes of Bankruptcy law. There will be tons of questions surrounding homes (if both partners purchased them prior) and cars. What I can tell you is that you should 100% speak to a Bankruptcy attorney prior to filing, given how much this will change things.
Again, congratulations to the thousands of New Yorkers that can now get married, and have wonderfully expensive weddings and homes with amazing decor (unless you’re planning to file for Bankruptcy, in which case lets keep the wedding simple.) We’re here to answer any questions you may have.