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Tuesday, August 07, 2012

IN A CASE OF FIRST IMPRESSION IN KENTUCKY, FEDERAL BANKRUPTCY JUDGE ALLOWS GAY COUPLE TO FILE JOINT BANKRUPTCY.

Gay married couple allowed to file joint bankruptcy in Kentucky
(PICTURED ABOVE ARE Joey Lester, left, and Bob Joles lost their $200,000 investment in a downtown market).
Written by
Andrew Wolfson |

Despite living together for 16 years, Bob Joles and Joey Lester of Louisville could not legally marry in the state of Kentucky.

Even after they wed May 9 in Buffalo, N.Y., the state of Kentucky wouldn’t recognize their union.

But that didn’t stop them in June from becoming the first gay married couple to file jointly for bankruptcy in Kentucky. Nor did it prevent a federal bankruptcy judge from confirming their reorganization plan July 24.

Kentucky voters amended the state constitution in 2004 to say that “only a marriage between one man and one woman shall be valid or recognized as a marriage.” But Joles and Lester were allowed to file a joint Chapter 13 bankruptcy in federal court because the Obama administration has decided it will no longer contest such filings by married same-sex couples.

Joles and Lester, who lost more than $200,000 they invested in a downtown market — The Bodega at Felice — say the administration’s change was a blessing.

It allowed them to save $306 on a second filing fee and let Joles, who managed the store and is now unemployed, keep his car. And it kept them from having to divide the stuff they had accumulated during their lives together, which Joles said would have been like going through a divorce.

But the couple, who live in Clifton, said the real advantages of filing jointly were intangible.

“It made our marriage seem more real,” said Joles, 48. “And it forced the court to recognize us as a married couple.”

Lester, 47, a senior sales trainer for Verizon Wireless, said that while the couple regretted having to file for bankruptcy, it made sense to do it together.

“We have been together for 16 years, and our money is our money and our debts are our debts,” he said.

But opponents of gay marriage, including Martin Cothran, a policy analyst for the Family Foundation of Kentucky, said the Obama administration’s policy change is a “backdoor way of establishing same-sex marriage in the state” — violating the constitutional amendment his group helped get on the ballot.

State Rep. Stan Lee, R-Lexington, agreed, saying, “For a bankruptcy trustee and judge to allow this to go forward in the commonwealth of Kentucky is an affront to the citizens of this state who spoke very loudly in 2004 when they passed the marriage amendment.”

Lee, who has unsuccessfully fought to end partnership benefits for gays at Kentucky universities, also said he thinks it is “troubling that the Justice Department, at the direction of this president, would decide to choose what laws they enforce and not enforce. He is charged with enforcing all the laws, not just the ones he likes.”
Change in direction

Attorney General Eric Holder told Congress in February 2011 that the Justice Department would stop defending the Defense of Marriage Act, which bans recognition of gay marriages by the federal government.

Holder said that President Barack Obama decided that treating gay married couples differently violates the Constitution’s guarantee of equal protection under the law.

In July 2011, the Justice Department announced that the U.S. Trustee, the department’s division charged with enforcing the bankruptcy code, would no longer oppose joint bankruptcy filings by married gay couples. Previously, it had done so vigorously.

The Justice Department and the U.S. Administrative Office of the Court do not track how many bankruptcy cases have been filed jointly by gay married couples. But bankruptcy court officials in Louisville and Lexington confirmed that the Joles-Lester case is the first in Kentucky.

The couple’s lawyer, Shannon Fauver, who said she plans to file a bankruptcy petition for a married lesbian couple in the next few weeks, said the court’s acceptance “gives them protections they didn’t have before. It is a big deal.”

Chris Hartman, director of the Fairness Campaign, a civil rights group, said the change “is good news,” adding that there are more than 1,400 legal privileges, many of them money-saving, that are automatically afforded heterosexual couples yet almost universally denied to same-sex ones.

Fauver said after she filed the Joles-Lester petition June 5 in U.S Bankruptcy Court in Louisville, she received an email from the court asking if she had meant “to file for two guys.” Her legal word-processing software gave her no choice but two list one of the two men as “wife.”

“I said ‘yes’ — would you like to see their marriage license?” Fauver recalled.

William Lawrence, who was assigned to the case as the creditors’ trustee, said such a petition had never been filed in the Western District of Kentucky. Jerry Truitt, bankruptcy clerk for the Eastern District of Kentucky, said none have been filed there.

Lawrence said he asked Assistant U.S. Trustee Joseph Golden if he could accept it, and Golden informed him about the Justice Department’s new policy.
Upholding the law

Joles and Lester said they had no choice but to file after their banks declined to consolidate loans for their store at 829 E. Market St., which they ran from 2006 until it closed May 2009.

They said they feared that creditors would come after their home and other assets. They filed a business bankruptcy as well.

The couple’s petition listed assets of $414,443 and liabilities of $474,767, including loans from PNC, US Bank and Stock Yards Bank.

Under their plan, which was confirmed by Bankruptcy Judge Alan Stout, they must pay secured creditors $398 every two weeks for five years. Unsecured creditors will get about 5 cents on the dollar.

Justice Department spokeswoman Nanda Chitre said that while the department is no longer defending the Defense of Marriage Act when it is challenged in lawsuits, executive branch agencies are continuing to enforce it because it was enacted by Congress and it is the judiciary’s job to decide if it is constitutional.

She said the department decided not to contest filings by married gay couples in bankruptcy court because House Republican lawyers, who have stepped in to defend the act in some litigation, chose not to challenge those filings.

A spokesman for House Speaker John Boehner, R-Ohio, has said that would be too expensive and that bankruptcy cases are “unlikely to provide the path to the Supreme Court, where we imagine the question of constitutionality will ultimately be decided.”

Two cases involving the constitutionality of the Defense of Marriage Act appear headed to that court.

A spokesman for Mitt Romney’s presidential campaign, Christopher Walker, said in an email that “as president, Gov. Romney has pledged to appoint an attorney general who will defend the Defense of Marriage Act.”

For now, however, gay married couples may file bankruptcy jointly, which Joles said he appreciates.

“We live here and pay taxes here,” he said. “It is nice to know we have the same rights as other Americans.”

EDITOR'S NOTE: The federal Defense of Marriage Act

“In determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States, the word ‘marriage’ means only a legal union between one man and one woman as husband and wife, and the word ‘spouse’ refers only to a person of the opposite sex who is a husband or a wife.”

Kentucky Constitution

Marriage is prohibited and void:
(a) With a person who has been adjudged mentally disabled by a court of competent jurisdiction;
(b) Where there is a husband or wife living, from whom the person marrying has not been divorced;
(c) When not solemnized or contracted in the presence of an authorized person or society;
(d) Between members of the same sex;
(e) Between more than two persons

Kentucky constitutional amendment, 2004:

“Only a marriage between one man and one woman shall be valid or recognized as a marriage in Kentucky. A legal status identical or substantially similar to that of marriage for unmarried individuals shall not be valid or recognized.”

Jurisdictions that permit same-sex marriage

Connecticut, Iowa, Massachusetts, New Hampshire, New York, Vermont, Washington and Washington, D.C.


EDITOR'S COMMENT: I WONDER IF THIS CASE WOULD MAKE IT TO THE SUPREME COURT SO THE COURT CAN CLARIFY IF GAY COUPLES CAN FILE JOINTLY IN BANKRUPTCY COURT.

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