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Tenancy By Entireties Protection in Out of State Bankruptcy

I received an inquiry about a person filing bankruptcy in another state owning a parcel of real property in Florida jointly with his spouse. The state where the bankruptcy was filed does not recognize tenancy by the entireties as a form of ownership exempt from creditors. Is the Florida property subject to sale by the bankruptcy trustee?

This question involves conflicting law between two states, one state which does not recognize tenancy by entireties and Florida where the property is located and where TE property would be exempt in bankruptcy so long as the debtor and spouse do not have joint unsecured debts.

The general conflict rules is that the law applicable to real property is the laws of the state where the property is located. The general bankruptcy rule is that the bankruptcy court applies the laws where the debtor files. My guess is that in this case tenancy by entireties would protect the Florida property from administration in the foreign bankruptcy proceeding, again assuming no joint unsecured debts.

January 23, 2006 in Chapter 7 | Permalink

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