Elton and David

Not a true story and it applies to California, a community property state. After their marriage, Elton and David acquire significant wealth from their respective careers. David then suffers financial catastrophe. He must liquidate his estate through chapter 7 bankruptcy. Elton learns that in bankruptcy, a non-filing spouse's property (if acquired after marriage) may be part of the filing spouse's bankruptcy estate subject to liquidation. Elton's distraught imagining the worst scenarios. If his estate is compromised, he might end up wearing a pair of eyeglasses more than once. Elton hires his lawyer cousin, Daniel, a well-known gun. Daniel explains as follows:

In California, property acquired by either spouse after marriage is presumed to be community property and belongs to both spouses. Even if a person files for bankruptcy separately from his spouse, all the community property becomes part of the bankruptcy estate. The bankruptcy estate is subject to liquidation in chapter 7 bankruptcy. In chapter 13 bankruptcy, the extent of the bankruptcy estate can increase otherwise low payments due under the chapter 13 payment plan. It doesn't matter, for example, if a husband's Hyundai is in his name only. If he bought it after marriage, the presumption is that the Hyundai belongs equally to the wife.

Same-sex marriage is not recognized by the United States. Same-sex couples cannot file for bankruptcy jointly. If federal law excludes joint-filing of gay spouses, would it not also exclude recognition of a gay community estate?

Daniel's equivocal on this point. The answer is unclear. Will Elton make a sacrifice?

www.BankonitSD.com

Characters and scenarios are fictitious. The legal issues described are very narrow in scope, do not consider complicating factors and should not be relied upon. Consult with an attorney prior to taking or refraining from bankruptcy-related actions.