Trustee Can Sell MA Home Despite Tenancy By Entirety

12 Oct Trustee Can Sell MA Home Despite Tenancy By Entirety

A Chapter 7 trustee can sell the MA home of a married debtor and distribute the proceeds despite the objection of a nondebtor spouse, the nondebtor spouse’s own homestead, and the existence of an unterminated tenancy by the entirety.

The debtor only claimed the $15,000 federal exemption, believing there was only $8,000 equity at the time of the 2001 petition. The case was held open past the 2001 filing and 2002 discharge for other reasons, and in 2006 the trustee moved for permission to sell and distribute the proceeds. (Five years of MA real estate appreciation undoubtedly contributed to the trustee’s desire to sell the home, and the court denied a request to amend the exemption.) Debtor’s opposition was denied, and the denial was recently sustained on appeal to the U.S. District Court. Whitman v. Lassman, 2007 U.S. Dist. Lexis 56830 (D MA Aug 1, 2007) (O’Toole, J).

The bankruptcy court expressly withheld ruling on how the nondebtor spouse’s amount will be calculated, if any. An earlier opinion suggests that each spouse owns 100% of the property for lien avoidance purposes.

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L. Jed Berliner practices exclusively in consumer bankruptcy, foreclosure defense, and related consumer protection litigation such as credit card defenses and suing debt collectors. He established his Springfield, MA practice in 1988. Attorney Berliner is a regular and active contributor to the Bankruptcy Law Network, the Bankruptcy Roundtable, and the National Association of Consumer Bankruptcy Attorneys, three specialized consumer bankruptcy forums on the Internet, and is an informal mentor to regional practitioners. He is recognized by his peers as an expert in consumer bankruptcy issues. He thoroughly enjoys being rated "excellent" in his client surveys.

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