Tenancy in Entirety

[buggywhip maker]

Florida

I filed Chapter 7 before the rule changes, pro se. I used my personal exemption on some camera equipment, not on any other personal property because the furniture, appliances, etc. are owned jointly by my spouse and myself, and are listed as such in the filing.

The trustee is sending an appraiser to look at our personal property, I assume to see if it's worth taking to raise funds.

So, my question is, since personal property of a married couple is presumed by the state of Florida to be held by tenancy in entirety, and my spouse is not included in the bankruptcy, is not that personal property automatically exempt from being taken by the court?

 

[azatty]

No. Community property (Florida's presumption) and tenancy by the entirety are merely forms of joint ownership. Under the Bankruptcy Code, the trustee has the power to sell joint property even when one co-owner is not in bankruptcy.

Amend your schedules to claim that property as exempt!

 

[pmert]

Further question?

No. Community property (Florida's presumption) and tenancy by the entirety are merely forms of joint ownership. Under the Bankruptcy Code, the trustee has the power to sell joint property even when one co-owner is not in bankruptcy.

Amend your schedules to claim that property as exempt!

Does the person not filing bankruptcy entitled to 1/2 the equity?

 

[buggywhip maker]

I found this on a previous thread---

"Unlike joint ownership with rights of survivorship, “tenants by entireties” ownership affords excellent asset protection benefits. Tenants by entirety is a special form of joint tenancy ownership which is available only to married persons under common law. To qualify as tenants by entiretites property, the property in question must have certain characteristics:

joint ownership and control,
identical interest in the property,
the interest must have originated in the same instrument,
the interest must have commenced simultaneously,
the parties must have been married at the time they acquired the property, and
the surviivng spouse will own the property after either spouse dies.

In the case where both spouses are jointly indebted to a particular creditor, that creditor can involuntarily seize tenants by entireties property. Tenants by entireties protection exists only if a creditor has a claim against only one of the spousal owners.

In Florida, unlike most other states, all types of property, including all real property, tangible personal property, and intangible personal property, may be owned by a married couple as tenants by entireties. Whether a married couple owns property as unprotected joint tenants with survivorship or as protected tenants by entireties depends on the intent of the spouses. The Florida Supreme Court has said that any real or personal property owned jointly by a hustand and wife is presumed to be owned as tenants by entireties."

So, since Florida has its own bankruptcy rules, and the Florida Supreme Court has stated the above, my original question remains.

 

[azatty]

The trustee wouldn't be coming after the property unless he had grounds to do so. And he likely does: you probably have joint debts. Below is chapter and verse on how tenancy by the entirety property is treated in Florida, and my previous advice stands. I suggest that you retain local counsel if the trustee is coming after you.

In a case where a debtor and his non-filing spouse own property as tenants by the entireties, the Chapter 7 Trustee may not administer such assets in the absence of joint debts.. In re Wingate, 332 B.R. 649 (Bkrtcy.M.D.Fla.,2005).In re McRae 308 B.R. 572 (N.D. Fla. 2003) further summarizes the issue succinctly: Property owned jointly by Chapter 7 debtor and his nondebtor wife as tenants by the entirety can be administered by trustee in the amount of joint unsecured debt outstanding as of debtor's petition filing date.

Moreover, 11 U.S.C. §522(b)(2)(B), which contains a federal "tenancy by the entireties exemption" permits such exemption only to the extent that such interest is exempt from process under applicable non-bankruptcy law. As noted above, Florida allows creditors holding claims against both husband and wife to reach tenancy by the entireties property. Accordingly, the property is not safe if you claim it exempt under that Code section, either, because state law permits joint creditors to reach the TBE property.

The Supreme Court case to which you refer is probably Beal Bank v. Almand and Associates, 780 So.2d 45 (Fla. 2001). That decision is a landmark case in Florida, but it is also cited for the proposition stated above in Wingate and McRae namely that if the debts are joint, the property held in tenancy by the entirety can be reached by creditors, and thus, the trustee.

 

[buggywhip maker]

I thank you for your advice, I believe you've strengthened my position. We have absolutely no joint debts other than our mortgage, a secured debt. We have maintained separate finances for years in the event that something happened to me, my wife would have her own good credit rating.

So, I should be able to use the cases you presented to keep the trustee off my back, right?

 

[azatty]

Absolutely. But keep in mind the trustee will still challenge your position. I'm guessing the trustee is after you because you didn't claim exemptions on the personalty. So that's why I originally suggested exempting the property even if it is TBE property.

 

[buggywhip maker]

Thanks again. How do I go about amending my paperwork? What form(s) do I use? To whom do I send it?

 

[azatty]

You'd file an amended Schedule C, Property Claimed Exempt. As for the actual process, we do it all electronically, and it's voodoo to me (my assistants do that part). To hand file it, you'd take it down to the bankruptcy court clerk and let them know it's an amended schedule. There may be a $20 or so charge for the amendment.

 

[buggywhip maker]

AZATTY--

Thank you once again, you've been most helpful.

 

[buggywhip maker]

Okay, I've got an amended Schedule C ready to file with the court tomorrow.

Any idea of what kind of response I can expect? Can the amended form be disallowed for any reason?

Also, this case was filed on October 14, 2005. Wasn't this case supposed to be dismissed before now?

Thanks again.

 

[azatty]

You might draw an objection to the exemption.

We're just starting to see the discharges come through from cases filed in October. The Courts have been a little slow with the heavy volume of cases. Also, the fact that you receive a discharge does not mean that the case is over. Chapter 7 bankruptcies can remain open for years if there are assets to administer.

 

[buggywhip maker]

What would be grounds for an objection? Isn't my failure to claim an allowed exemption a correctable error?

 

[azatty]

Simple. You're representing yourself, and the trustee figures he can mess with you a little. Sad, but true.

Other than that, if the exemption is legitimate, there isn't much to which the trustee can object. If he does object, he will usually provide the reason behind the objection, and at that point I could tell you more.

 

[buggywhip maker]

Okay, I filed an amended schedule (no charge for schedule C amendment) and it was struck without prejudice by the judge for not having appropriate proof of service. I am currently resubmitting to cure the deficiency.

According to local rule 1009-1(e), I must give notice of amendment to any entity or entities affected thereby.

So, my new question is, since the debts have been discharged, do I have to serve notice to all on the mailing matrix, or just the trustees, judge, and the court?

Thank you once again.