Trustee Cannot Sell Jointly Owned Property If Hardship to Nondebtor Owner
By L. Jed Berliner, Springfield Bankruptcy Attorney on Oct 20, 2007 in Bankruptcy Cases of Interest, Benefits of Bankruptcy, Decisions of Interest, Featured, Marriage and Debt, Massachusetts, Protecting Assets In Bankruptcy
Earlier I posted about a very recent case allowing a trustee to sell a home jointly owned by a debtor and nondebtor spouse despite the Massachusetts tenancy by the entireties. The case ruled that there was no significant hardship to the nondebtor owner from the sale. A hardship will lead to a different outcome.
Sale of both a debtor’s and nondebtor’s ownership interest of co-owned property will certainly lead to a greater recovery than the sale of one owner’s interest alone, but the statute also requires a finding that the benefit from that increased recovery is greater than any detriment to the nondebtor owner. 11 USC 363 (h).
In Salem v. Coombs (In re Coombs), 86 BR 314 (Bankr D MA 1988), the court ruled that the detriment of selling the disabled nondebtor spouse’s interest in the marital home, specially remodelled to accommodate her handicap, was greater than the benefit to the creditors and refused to permit the sale.
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