Bank accounts and tenancy by entirety

[mysticspirit25]

We have friends who are married, they have a joint saving account with about 150k in the bank, the account is titled Tenants by Entirety, therefore exempt under Ch7, since only one spouse is filing (long story) the filing spouse, she is very bad with money, owes about 70k, and non-filing spouse does not want to liquidate the savings acct to pay other spouses bills, understandable as he did not rack them up. Money has been in TBE account for about 2 years, how does this look when you exempt 150k under TBE and are seeking to discharge 70k of debt?? Legally its allowed, but does not look good morally...how does the TT view this?? BTW they are not joint debts, so no worries on breach of TBE

[DeadManCrawling]

I do not think it matters how the trustee views things that are well established by law. They will in all likelihood, though, file a totality of the circumstances objection, and may win. While TbE assets are immune from seizure, they may be allowed to use them to establish abuse under the new law. Not sure I have seen case law on this exact issue.

What that would mean is: The trustee cannot seize the TbE funds, but the CH 7 is dismissed and they are in the crosshairs of the collectors again.

Morality does not exist in BK courts, except when outright, egregious, fraud is committed, in my opinion.

It is the totality clause that I would look to, and research, in terms of how it is applied to an exempted cash account of that size.

Others will hopefully weigh in with thoughts.

[backtoschool]

We have friends who are married, they have a joint saving account with about 150k in the bank, the account is titled Tenants by Entirety, therefore exempt under Ch7, since only one spouse is filing (long story) the filing spouse, she is very bad with money, owes about 70k, and non-filing spouse does not want to liquidate the savings acct to pay other spouses bills, understandable as he did not rack them up. Money has been in TBE account for about 2 years, how does this look when you exempt 150k under TBE and are seeking to discharge 70k of debt?? Legally its allowed, but does not look good morally...how does the TT view this?? BTW they are not joint debts, so no worries on breach of TBE

I think the US trustee will get involved in this case, and that there is a good chance that the case will be dismissed due to totality of circumstances.

Not wanting to spend money that you have in the bank to pay off debts is not a very good reason to file bankruptcy and the trustee will see half money as available for paying off the debts even with the tenants by entirety clause. The tenants by entirety clause may get them out of directly paying the debts due to a technicality, but the case has a good chance of being dismissed due to totality of circumstances because of that large amount of money in the bank.

[frogger]

I don't see that it will fly. I agree that the US Trustee would probably get involved and dismiss this one.

[Spagal]

That makes sense. Even if the account is TBE then 50% would still be "available" to pay the debts...esp where the 1/2 the bank account balance exceeds the debt owed.

I can't see this not being eyeballed. Its a little different than not having the money to pay. This clearly seems like not wanting to pay. I am curious how this plays out.