What is Tenancy by the Entireties Protection in Pennsylvania Bankruptcy?

There are various ways in which a person or multiple people may own a home. Perhaps one of the most common ways is tenancy by the entirety. In short, this type of homeownership occurs when a married couple jointly owns a home. The great thing about tenancy by the entirety is that your home may be completely shielded from creditors if you file for bankruptcy.

The way tenancy by the entirety works is that both spouses who own a home together own 100% of the home. They do not each own 50% of the house. Each spouse owns 100% of the home together. This means that if only one spouse files for bankruptcy, creditors cannot seize the home because it is 100% owned by the other spouse, who has no involvement with the creditors. This kind of protection is typically only extended to married couples, including same-sex married couples. Your attorney can help you claim this protection when you or your spouse files a petition for bankruptcy.

Contact our Pennsylvania bankruptcy lawyers for a free, confidential case review by calling Young, Marr, Mallis & Associates at (215) 701-6519.

How Tenancy by the Entirety Works in Pennsylvania Bankruptcy Cases

When filing for bankruptcy, you might be very concerned about what could happen to your house. Depending on how you file, your properties and assets, including your house, may be seized and liquidated to pay your debts. However, if you own a home in a tenancy by the entirety with your spouse, your home may be protected from creditors.

When a married couple purchases a home together, they do not split ownership 50/50. Instead, both are legally considered to own 100% of the house. As such, if only one spouse files for bankruptcy, creditors may not seize the home because the other spouse also owns it entirely. Creditors may not seize assets that 100% belong to someone else.

If you own your home with your spouse, be sure to discuss tenancy by the entirety protections with your bankruptcy attorney. While you might not be able to protect all your assets, you might be able to protect your home.

Who Benefits from Tenancy by the Entireties Protection?

Again, there are different ways in which more than one person may own a home together. Generally, only married couples may take advantage of tenancy by the entirety protections, if they purchased it together while already married. Same-sex married couples should also be eligible for this protection.

Unfortunately, this protection may not cover those who own a house together but are not married. If you file for bankruptcy and there is a co-owner of your home, such as a friend or sibling, discuss it with them and your attorney.

How to Claim Tenancy by the Entirety Protection in a Pennsylvania Bankruptcy Case

If you file for bankruptcy and want to claim tenancy by the entirety protection, you should discuss this with your lawyer. This type of protection may not be automatic, and creditors must be informed about who owns the home.

You may need to include this information when you file your initial bankruptcy petition. Depending on how you file, our Allentown, PA bankruptcy lawyers may need to provide a complete list of your assets, accounts, and property. When we do, we must include details about joint ownership, including properties occupied by tenants by the entirety.

Limitations on Protection for Tenancy by the Entirety in Pennsylvania

Tenancy by the entirety may only apply to assets jointly owned by a married couple. If you and your spouse jointly own your house, you may be considered tenants by the entirety, and you each own 100% of the home.

If only you file for bankruptcy, your creditors cannot force a sale of your house to pay your debt. However, assets or properties that are not jointly owned may not be so protected.

For example, suppose you own your home and your spouse moved in with you after getting married, but your spouse does not legally own the house. In that case, the house would not be shielded from bankruptcy proceedings under tenancy by the entirety protection.

Your home or other assets may similarly be left unprotected if your spouse also files for bankruptcy with you. In that case, any assets you own together may be fair game for creditors, including your house.

How Do I Know if I Qualify for Tenancy by the Entirety Protections?

If you are unsure whether you can protect your home using a tenancy by the entirety protection, you should talk to your lawyer before you file your petition.

Are you married? This protection typically only applies to married couples, including same-sex married couples. If you own a home with a partner but are unmarried, you may need to explore other legal options.

Have you and your spouse comingled assets, or do you have separate finances? Often, when one spouse files for bankruptcy, the other spouse may be affected if they share assets and accounts. For example, if you file for bankruptcy because of credit card debt, but your spouse is also named on these accounts, they may have to file with you. In that case, certain assets might not be protected.

What to Do if You are Not Protected by Tenancy by the Entirety?

If you find that your home is not protected, you may consider taking advantage of federal homestead exemptions. Under federal law, you may exempt up $31,757 of your home’s equity from the bankruptcy process. This is doubled if you and your spouse file for bankruptcy together. Unfortunately, Pennsylvania does not offer any homestead exemptions, and the federal option may be your only choice.

The homestead exemption might not help you keep your home, but it may protect some of the value from the sale.

Call Our Pennsylvania Bankruptcy Lawyers for Help Today

Contact our Philadelphia, PA bankruptcy lawyers for a free, confidential case review by calling Young, Marr, Mallis & Associates at (215) 701-6519.