A Tenancy by the Entirety (TBE) is a form of property ownership in Missouri, and a few other states, reserved for married couples. Missouri recognizes TBE ownership in both real and personal property. Property owned as tenants by the entirety belongs to the marriage, which means that both husband and wife own the property as one person, and thus, both of them own 100% interest in the property.
Something that all bankruptcy attorneys should be thinking about when they have an initial consultation with a client is how they can protect their clients from having to turn over property to the trustee. When meeting with a prospective client that is married, the tenancy by the entirety exemption should immediately come to mind. If you do own the property with your spouse in TBE you may be able to exclude the property from your bankruptcy estate. That means that no matter how much equity you have in your home or other property, if owned by both spouses (and meeting the other criteria), your property will be protected.
In Missouri, we have the Homestead Exemption. That means that you can protect $15,000 of equity in your home. This could present a problem for people with built up equity in their house. If, for example, the house is worth $200,000 and $150,000 is owed on it, then there is $50,000 of equity, $35,000 of which would be unprotected. This would likely lead to a Chapter 13 filing where the unexempt equity would have to be paid over to the trustee over a period of 3-5 years and paid out to your unsecured creditors. Rather than having to do this, the tenancy by entirety exemption could protect that unexempt equity. In Missouri, personal property such as checking accounts or automobiles could also be protected under this exemption.
There are certain factors that need to be met in order to qualify for this sort of protection. The first thing, as stated above, is that you need to be married. However, you must be filing the bankruptcy without your spouse to get the protection. If you file jointly, your property will not be protected. The next factor is that all of the debts that you are trying to discharge (credit cards, medical bills, etc.) are yours alone; none are joint debts with your spouse. The property, however, that you are trying to protect, will need to be owned as tenants by the entirety. That means that you acquired the property together, while you are married and took possession of it at the same time. Those are the requirements to protect your property with the tenancy by the entirety exemption.
If you have any questions about this or anything else related to bankruptcy, it is my recommendation that you consult a St. Louis Area Bankruptcy Attorney today. We offer free consultations at a number of locations.