Tiffany R. Harper, Gelding the Lily: How the Bankruptcy Code?s Promotion of Marriage Leaves it Impotent

• Citation: Vol. 28 No. 1
• Publication year: 2011

GELDING THE LILY: HOW THE BANKRUPTCY CODE’S PROMOTION OF MARRIAGE LEAVES IT IMPOTENT

Tiffany R. Harper*

INTRODUCTION

The American institution of marriage used to be the primary means by which adults combined wealth and debt and created familial units for raising children. When marriage was the means for creating financial interdependence, the Bankruptcy Code’s grant of certain benefits based upon marital status was an appropriate method for ensuring that the most vulnerable families were able to achieve a financial fresh start. However, the institution of marriage is evolving and is no longer the vehicle by which a large majority of American couples become financially interdependent. For many same-sex couples who reside in states where they are unable to legally marry, building a financially interdependent family outside of the bonds of marriage is currently the only

option.1 Many other heterosexual and same-sex couples are voluntarily

choosing financial interdependence without marriage as they build families and raise children.2 Thus, the Code’s reliance upon marriage to identify which debtors are financially interdependent to receive certain bankruptcy benefits is antiquated and out-of-step with the evolution of American families. In turn, the Code’s failure to evolve has resulted in an impotent law because it lacks the

power to provide the best financial fresh start to all financially interdependent debtors and families. Congress should revise the Code to break the link between marriage and bankruptcy benefits so that all debtors who are a part of

* Tiffany R. Harper is an attorney practicing primarily in the areas of bankruptcy and commercial law.

1. ., Dartmouth College (2005); J.D. Washington University in St. Louis (2008). I would like to thank my husband, Amiel Harper, and law school professors, Barbara Flagg and Kimberly Jade Norwood, for their support with this Article and encouraging me to pursue my dreams of becoming a law professor.

   1. To date, only a few states have recognized same-sex unions and granted legal status to these couples.

      Same-sex marriage is recognized in Connecticut, Iowa, Massachusetts, New Hampshire, New York, and Vermont. A few other states recognize civil unions or domestic partnerships between same-sex couples and grant legal rights to some couples that are similar to the rights that married couples enjoy—California, Delaware, Hawaii, Illinois, Nevada, New Jersey, Oregon, Rhode Island, and Washington. See Same-Sex Marriage, Civil Unions and Domestic Partnerships, NAT’L CONF. ST. LEGISLATURES, http://www.ncsl.org/ default.aspx?tabid=16430 (last visited Nov. 11, 2011).

   2. See infra p. 42 and notes 71–72.

      financially interdependent unit can use these benefits to receive the best fresh start.

      
      

      The Code currently contains several benefits that only married debtors may utilize when seeking a financial fresh start. These benefits often translate into valuable amenities that help married debtors achieve a financial fresh start in the best way possible. However, given the sharp increase in the number of American families that are financially interdependent without the bonds of marriage, these benefits fail to reach many debtors whose financial circumstances are the same as—or very similar to—financially interdependent, married debtors.

      
      

      Linking bankruptcy benefits to marital status is further complicated by the Defense of Marriage Act (DOMA), which applies to all federal acts and laws, including the Code.3 DOMA limits the definitions of “spouse” and “marriage” so that only heterosexual couples are included.4 In light of the evolution of marriage where a growing number of states permit same-sex couples to legally marry or enter into civil unions, DOMA’s impact on the Code is two-fold.

      First, same-sex, legally married couples are not eligible to receive benefits under the Code that are specifically reserved for legally married debtors.5

      
      

   3. 1 U.S.C. § 7 (2006) (applying the limited definition of marriage to “any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States”). DOMA passed both houses of Congress by large majorities. U.S. Congress Votes Database: H.R. 3396, WASH. POST, http://projects.washingtonpost.com/congress/104/senate/2/votes/280/ (last visited Oct. 1, 2011) (showing that 85 senators voted to pass DOMA, 14 senators voted against DOMA, and 1 senator did not vote);

      U.S. Congress Votes Database: H.R. 3396, WASH. POST, http://projects.washingtonpost.com/congress/104/ house/2/votes/316/ (last visited Oct. 1, 2011) (showing that 342 members of the House voted to pass DOMA, 67 voted against DOMA, and 22 members did not vote). DOMA was ultimately signed into law by President William Clinton on September 21, 1996. See Defense of Marriage Act, Pub. L. No. 104-199, 110 Stat. 2419 (1996).

   4. See 1 U.S.C. § 7; 28 U.S.C. § 1738C. DOMA limited the definition of “marriage” for federal laws to

      “a legal union between one man and one woman as husband and wife.” 1 U.S.C. § 7. DOMA also defined “spouse” as “a person of the opposite sex who is a husband or a wife.” Id. Thus, DOMA’s obvious targets were same-sex couples seeking to legally marry. See H.R. REP. NO. 104-664, at 2 (1996), reprinted in 1996 U.S.C.C.A.N. 2905, 2906 (stating the goals of DOMA are both to protect “the institution of traditional heterosexual marriage” and allowing states to not recognize same-sex marriages conducted legally in other states). Professor Dickerson noted that Congress passed the act in anticipation of the state of Hawaii allowing same-sex couples to obtain marriage licenses. See A. Mechele Dickerson, Family Values and the Bankruptcy Code: A Proposal to Eliminate Bankruptcy Benefits Awarded on the Basis of Marital Status, 67 FORDHAM L. REV. 69, 69 n.1 (1998).

   5. In fact, because the Code has not been revised to be consistent with the evolving institution of

      marriage, even some debtors who are legally married are unable to take advantage of the bankruptcy benefits reserved specifically for them. For example, the ability of a same-sex, legally married couple in California to file a joint bankruptcy petition, a benefit specifically reserved in the Code for married debtors, was recently challenged when a bankruptcy trustee sought to dismiss their chapter 13 petition and argued that the same-sex

      Second, the reach and impact of the Code is further limited when bankruptcy benefits are restricted to heterosexual married debtors.6 Thus, by tying the breadth of bankruptcy relief to marital status, the Code unfairly and unnecessarily limits its ability to fulfill its mission of helping honest debtors

      get a fresh start. This is particularly true given the decline of marriage rates in America,7 and the contradiction that arises when certain legally married debtors are denied benefits awarded to other legally married debtors.

      
      

      This Article challenges the logic of limiting benefits in the Code to married debtors and argues that awarding benefits based on marital status reduces the efficacy of the Code as marriage rates continue to decline in the United States.8 This Article also explores how the availability of these benefits is dictated by

      individual states’ definitions of marriage and determination of which of their citizens can legally marry. Thus, the reach and force of the Code is further limited by the discrepancy between individual states’ definitions of marriage and DOMA. Thus, the steady decline in marriage rates and the continued rise in nontraditional familial units leave the Code out of step with American society. After analyzing current marriage patterns and trends, this Article posits that if Congress fails to address this issue, the Code stands to become a federal act that provides the most benefits to those Americans who are most likely to marry—the wealthy and highly educated. However, the promotion of the institution of marriage is not the purpose of the Code, nor does it maximize the effectiveness of the Code, to primarily privilege married individuals. Thus, the manner in which bankruptcy benefits are awarded needs to be revamped so that these benefits fit into the new paradigm of American families while simultaneously accomplishing the Code’s original purpose: to provide all

      honest debtors with a fresh start.9 As a solution, Congress can make the Code

      more effective, powerful, and wide-sweeping by awarding benefits to debtors based upon criteria that do not limit the Code’s effectiveness or give individual states the ability to discriminate between honest debtors.

      
      

      couple could not file a joint petition due to DOMA’s definitions of spouse and marriage. In re Balas, 449 B.R. 567, 570–71 (Bankr. C.D. Cal. 2011).

   6. See id. at 571.

   7. Social Indicators of Marital Health and Well-Being: Trends of the Past Four Decades, in NAT’L MARRIAGE PROJECT AT THE UNIV. OF VA. & CTR. FOR MARRIAGE & FAMILIES AT INST. FOR AM. VALUES, THE

      STATE OF OUR UNIONS: MARRIAGE IN AMERICA 2010, at 61, 63 fig.2 (W. Bradford Wilcox ed., 2010).

   8. Id.

   9. See Marrama v. Citizens Bank of Mass., 549 U.S. 365, 367 (2007).

      Part I briefly summarizes the goals of the Code and identifies the existing benefits that are awarded to debtors based solely upon marital status. Part II analyzes the ways that awarding bankruptcy benefits based upon marital status restricts the Code’s ability to maximize its effectiveness and provide all honest debtors with the best fresh start. Part III suggests ways that the Code can be amended so that the Code is no longer impotent.

      
      

      1. THE GOALS OF THE CODE AND BANKRUPTCY BENEFITS FOR MARRIED DEBTORS

         
         

         The goals of the Code are few in number and have remained virtually unchanged throughout the Code’s revisions since bankruptcy laws were first enacted in the United States in the 1800s.10 The Supreme Court announced as long ago as 1934 that a primary purpose of the Code is to provide honest debtors with a “fresh start” after financial difficulty.11 Later courts have upheld that the fresh start, along with the...