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cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
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Experience:  Bankruptcy professor.
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If a person that is married in Pennsylvania owns a home with

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If a person that is married in Pennsylvania owns a home with wife and husband individually files for Chapter 7 and uses the Federal exemptions and not the state exemptiions does that person still get the TBE exemption?

Trying to understand why a married person filing chapter 7 in PA., individually, would use the PA state BK exemptions instead of the Federal. As I Understand, the TBE law is in effect the minute a person is married. Perhaps when filing bankruptcy the TBE becomes an issue and one must choose the state exemption to get the TBE marital property protection. I see on the PA state exemptions there is no homestead allowance except there MAY be TBE protection. Just confused.

Must be answered by an attorney that Knows PA Law. No interest in somebody that doesn't know the answer for a fact.

cfortunato : Hi JACustomer,
cfortunato :

My name is XXXXX XXXXX I'm a Bankruptcy attorney here to assist you.

cfortunato :

The federal government does not recognize TBE, which is a state contruction. (Not all states recognize it either.)

cfortunato :

In any event, if a Bankruptcy filer chooses to use the federal exemptions, that filer will not be able to use TBE to protect property.

Customer:

So if one spouse files chapter 7 in PA using Federal exemptions, and there is 250K equity in the home. The home will be sold, and the wife will get her 50% (125,000) of the equity and the person filing gets his Federal exemption ($21,625.00) and the Bankruptcy trustee disperses the rest? So with that scenerio, I see PA state Exemption is the way to go to protect the equity in the home and prevent a sale of the home.

cfortunato :

Are the debts in only one spouse's name?

cfortunato :

(A TBD cannot protect the home when the debts are in both spouse's names.)

cfortunato :

Typo: "TBD" should read "TBE".

Customer:

All unpaid debts only in the name of the filing spouse. Mortgage in both names, but current and will remain current. Same with joint auto accounts, all current and will remain current.

cfortunato :

Thank you for your resonse.

cfortunato :

That means that using the PA state exemptions (but not the federal exemptiions) will allow the homestead to remain untouched by the Bankruptcy court if the house is held as TBE.

cfortunato :

And your analysis regarding the outcome if federal exemptions are used is correct.

Customer:

Thank You and that's what I thought, just trying to understand the system a bit better. GReat Responses...

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