What is Tenancy by the Entireties Protection in Pennsylvania Bankruptcy?

Of all the ways a person or multiple people may own a home, one of the most common is tenancy by the entirety (TBE). 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 without your spouse.

The way tenancy by the entirety works is that both spouses who own a home together own 100% of the home. 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 in the case. This kind of protection is typically only extended to married couples. Our attorneys 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 Does Tenancy by the Entirety Work in Pennsylvania Bankruptcy Cases?

It’s normal to be very concerned about what could happen to your house when filing for bankruptcy. Depending on how you file, your properties and assets, including your house, may be seized and liquidated to repay debts. Tenancy by the entirety is a type of home ownership for married couples that stops one spouse’s debts from jeopardizing the shared home.

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 our bankruptcy attorneys before filing your case. While you may not be able to protect all your assets, you can protect your shared home.

Who Benefits from Tenancy by the Entirety Protection in Pennsylvania?

Tenancy by the entirety is a type of property ownership that only applies to married couples, and you can’t rely on these protections if you own a house with a partner but are unmarried.

Married Couples

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.

Unmarried Couples

Unfortunately, this protection may not cover those who own a house together but are not married in Pennsylvania, even if they are registered domestic partners. 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 our attorneys.

What Are Key Aspects of Tenancy by the Entirety Protection in Pennsylvania?

Tenancy by the entirety protections have several key aspects that our lawyers can use to your advantage during a Pennsylvania bankruptcy case.

Protection from Creditors

The most important thing to know about the TBE protection in Pennsylvania is that it can protect creditors from forcing the sale of your home or foreclosing on it.

Unlimited Equity

While the federal homestead exemption only lets you protect up to $31,575 of equity in your home, or twice that if you file jointly as a married couple, the TBE protection in Pennsylvania for equity in property is unlimited.

No Protection for Joint Debts

The Tenancy by Entirety protection in Pennsylvania doesn’t protect your home against joint debts you share with your spouse that creditors want to collect on, and could force the sale of your home or put a lien on the property.

No Protection in Joint Bankruptcy Filing

The TBE protection doesn’t apply if you and your spouse are filing for bankruptcy together in a joint case. In this situation, our Pennsylvania bankruptcy lawyers may claim the federal homestead exemption to protect your home.

How Can You 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 should 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 home, you may be considered tenants by the entirety, and each of you owns 100% of the home.

No Protection for Other Assets

If you file for bankruptcy alone without your spouse, 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 protected in this way.

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

No Protection in Joint Bankruptcy Cases

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?

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.

Are Your Finances Comingled?

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 your home is not protected, consider taking advantage of federal homestead exemptions. The homestead exemption might not help you keep your home, but it may protect some of the home’s value from the sale.

Under federal law, you may exempt up to $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.

FAQs About Tenancy by the Entirety Protection in Pennsylvania Bankruptcy

What Does the Tenancy by the Entirety Protection Cover in Pennsylvania?

Tenancy by the entirety protects marital property from creditors seeking to collect debts, such as real estate, household goods, and even some business assets.

When is Protection from the TBE Limited in Bankruptcy?

Protection from the tenancy by the entirety during bankruptcy is limited when married couples share joint debts, or when fraudulent property transfers are made directly before bankruptcy to benefit from the protection.

Are Divorced Couples Eligible for the Tenancy by the Entirety Protection?

Divorced couples are not eligible for tenancy by the entirety protection, even if they still live together or own property in Pennsylvania.

Do You Have to Claim the TBE Protection to Benefit from It?

You must expressly indicate that you will be using tenancy by the entirety to protect your home and other marital real estate from creditors, and our lawyers can make sure you claim this exemption when filing your bankruptcy case.

Is Using Tenancy by the Entirety Protection During Pennsylvania Bankruptcy Worth It?

Using the TBE protection to shield your home and other marital property from creditors is certainly worth it, especially in Pennsylvania, where bankruptcy exemptions are typically limited.

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.