New Jersey tenancy by the entirety and chapter 7

[jbackos]

Hi all,

I have a situation that I would like to clear up if possible. I am currently in chapter 13 and pre-confirmation. If I or the court converts the filing to a Ch.7 (provided I don't elect to dismiss), how does this affect the residence? It is currently jointly owned by me and my spouse. All debts are held by me alone; my spouse owes no debt at all.

Everything I read indicates that the house is untouchable but my attorney insists that even though it is owned by TBE (tenancy by the entirety), that the trustee can force a sale and distibute my equity to the creditors and my spouse's equity to her.

This does not make sense. I would appreciate anyone's input on this.

Thanks,

John

[tcreegan]

filing alone?

Hello jbackos,

Need a key piece of info: are you filing alone or are both of you filing?

A Tenancy by the Entirety allows spouses to own property together as a single legal entity. Under a tenancy by the entirety, creditors of an individual spouse may not attach and sell the interest of a debtor spouse: only creditors of the couple may attach and sell the interest in the property owned by tenancy by the entirety.

There are three types of concurrent ownership, or ownership of property by two or more persons: tenancy by the entirety, Joint Tenancy, and Tenancy in Common. A tenancy by the entirety can be created only by married persons. A married couple may choose to create a joint tenancy or a tenancy in common. In most states a married couple is presumed to take title to property as tenants by the entirety, unless the deed or conveyancing document states otherwise.

The way I read this, if you filed alone, the house is untouchable b/c of your spouses' interest as the non-debtor spouse. But if you both filed, it can be taken by the BK trustee and sold to pay your debts in a Ch 7.

Of course you have a certain amount of equity that is protected. In NJ you would use the federal exemption (NJ you can choose state or federal exemptions) of $18,450 Basically, if your equity in the house is 18450 or less you can keep the house. If you have equity over 18450 the BK trustee sells the house and gives you the 18450 exempted equity. (all this if you filed jointly w/ your spouse)

Another good question: In NJ does the homestead exemption get doubled in a joint filing? My gut says no, but maybe I am wrong....

Tom in Colo

[jbackos]

Thanks, I filed alone

[jbackos]

To clarify my question,

Can the trustee sell a property held in the entirety without the consent of the second deedholder if that individual is not a party to the bankruptcy?

Thank you,

John

[blockhead]

This link could help, written by a bankruptcy judge, although it is a bit technical

http://www.ilnb.uscourts.gov/opinions/JudgeWedoff/TBEoutline.pdf

[tcreegan]

Hi John,

Can the trustee sell a property held in the entirety without the consent of the second deedholder if that individual is not a party to the bankruptcy?

The way I read the law, the answer is NO
But I am not lawyer or judge, I don't even portray one on TV...

Tom in Colo

[keepmine]

To clarify my question,

Can the trustee sell a property held in the entirety without the consent of the second deedholder if that individual is not a party to the bankruptcy?

Thank you,

John

I'd ask your lawyer why he believes T by E won't protect your home.