Tenancy by the entirety - Filing jointly

[bkhelp10]

We live in Virginia and hold our primary home jointly as Tenancy by the entirety. Outside of the mortgage which is joint and which we are current on we hold several individual debts but no other joint debts. We have significant equity in our primary home. It seems clear that if we file separately and individually then the entire home equity is exempt/protected under Tenancy by the entirety. However not very clear on what would happen if we jointly file for Capter 7 bankrupcy. I guess the primary home in that case would become part of the estate but is the equity still protected by Tenancy by the entirety from our individual debtors ? or can the trustee liquidate the home and pay off individual debtors since we are filing bankruptcy jointly?

[justbroke]

This is a legal question that you should ask a Virginia licensed bankruptcy attorney. For what it's worth, here in Florida, personal property held as TBE would lose most of its protections if the debtors filed together. Its nuanced and depends on the individual debts as applied to the individual exemptions available. At least, in Florida, our homes are 100% protected--as real property--as provided by our constitutional unlimited homestead exemption (Article X, Sec. 4). If your state doesn't have such protections then a home is likely only exempt to the amount available to each debtor under your State's specific exemption laws for a homestead.

Since you have so much equity, you really need to get an attorney and ask them these questions and develop a strategy. It's too much to play around with.

[bkhelp10]

Thank you for your response, i asked 2 different local attorneys and they both had conflicting responses so now I am confused. One said if we filled jointly then only joint debt holders can go for the TBE property and since we have only individual debts then all our equity and home is protected. The other attorney asked us to file individually and not at the same time to protect the house because TBE protection is lost of we file jointly.

[justbroke]

And that's the problem with TBE. For us here in Florida it does not destroy TBE but, as you wrote, joint creditors would be able to get at TBE property. That's the strategy. Trying to figure out the best way to protect you from the creditors. Only where there is no joint debt does the TBE have it's full affect.