What Is Tenancies By The Entireties And How Can It Help You In Bankruptcy?

When you file for bankruptcy, you do not and will not lose all of your property. That’s because bankruptcy law allows you a certain amount of exemptions. Exemptions are property or dollar limits that you can keep; exempt property is absolutely protected from being taken by the bankruptcy court.

Florida’s Tenancies by the Entireties

Florida law has a number of bankruptcy exemptions, but one very powerful exemption that many people don’t think about is tenancies by the entirety or TBE. Property that is considered TBE is any property that is owned jointly by a husband and wife.

Property that is and which qualifies as TBE is protected from being taken by any creditor–that includes creditors in your bankruptcy, but also protection from being taken by creditors in any other aspect, such as in collection lawsuits, or to enforce any judgment against you, even outside of bankruptcy. That’s because legally, the property is owned by the marriage–not by either spouse individually.

What Property Qualifies?

Of course, not all property has an official title to it, like a car or a house may have, so how does anybody know if property is, in fact, TBE property?

Property that was acquired by both spouses, at the same time, while married is considered TBE property. In some cases, like with bank accounts, it doesn’t matter whose name the property is titled in; so long as the time and acquisition requirements are met, the property is TBE property.

Businesses can also be TBE property, which can, in some cases, and if both spouses own the business, exempt a family business from being taken in a bankruptcy.

Of course, there may be times when a married couple doesn’t want property titled in both their names. Property can be separated, or retitled. But if it is, the couple does risk losing the tenancies by the entireties protection.

What TBE Does

TBE is a complete exemption from and against any creditor who is enforcing a debt that is owed by one spouse. The creditor cannot take TBE property, to collect on any debt or judgment that is the obligation of only one spouse.

So, in the context of a bankruptcy, if only one spouse files a bankruptcy, the bankruptcy court and creditors could not take any property that is TBE-that would be taking marital property, to satisfy the debt of only one spouse.

TBE makes being married, and the acquiring of property during a marriage, a powerful asset protection tool. Property that is exempt under TBE, does not have to be exempted under other provisions of the bankruptcy code. This frees other bankruptcy exemptions up, to be used for the value of, and to protect, other property.

Questions about your bankruptcy? Contact the Boca Raton bankruptcy attorneys at the Law Offices of Stephen Orchard at 561-455-7961 today.

Sources:

rocketmortgage.com/learn/tenancy-by-entirety

investopedia.com/terms/t/tenancy-by-the-entirety.asp