Trustee Cannot Sell Jointly Owned Property If Hardship to Nondebtor Owner

20 Oct Trustee Cannot Sell Jointly Owned Property If Hardship to Nondebtor Owner

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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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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