Archive for the ‘Bankruptcy Exemptions’ Category

Tenancy by the Entirety Deed in Bankruptcy

Illinois has opted out of the Federal Bankruptcy Exemptions, so we have our own set of exemptions that were passed by the Illinois Legislature. By default, we have a homestead exemption of $15,000 per debtor for occupied residential real estate in Illinois. This means, that in a bankruptcy, a debtor would only be able to protect $15,000 of equity per filer, so if there are two debtors that amount increases to $30,000.

Recently I had a case where a house was jointly owned by husband and wife, and the deed was titled in the form of Tenancy by the Entirety. This is a very interesting quirk in the Illinois Bankruptcy Exemption Law because if the spouse if not a filer in the current bankruptcy then her assets are not under the jurisdiction of the Bankruptcy Court and cannot be distributed to creditors by the trustee. In order for a title to be held in Tenancy by the Entirety the parties owning the property must be married when they originally took title to the home. In addition, this adds extra protection from creditors. Creditors may typically only come after the house if both spouses are indebted to the creditor in collections, not just one or the other spouse.

How it Works in Bankruptcy

In bankruptcy, the application is similar. If just one party files for the bankrputcy, as a married individual. 100% of the value of the property is exempted in the bankruptcy. That means, that no matter the value of the home, the trustee will be unable to liquidate a property that is held by tenancy in the entirety. This is very important for married couples that are contemplating purchasing real estate. The difference between a Tenancy by the Entirety Deed and a Tenancy in Common Deed is immense from a collection standpoint and could be the reason one loses their home later in life.

Chicago Bankruptcy Attorney Steven J. Grace

The intricacies of filing for bankruptcy are immense, especially in cases where there are assets that are subject to liquidation and a good bankruptcy Attorney may be the difference between losing your home (it really does happen). If you would like to speak more about your bankruptcy options, call Attorney Steven J. Grace at 312-493-6912 today.

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At The Law Offices of Steven J. Grace, based in Chicago, Illinois, we represent clients throughout Chicagoland, including the cities of Deerfield, Jefferson Park, Lisle, Northbrook, Oak Brook, Park Ridge, Schaumburg, St. Charles and Warrenville; and other communities in Cook County, Dupage County, Will County, Grundy County, Kendall County, Kane County, LaSalle County and Lake County.