1. Can the husband and wife buy business property* jointly under TBE protection, of the wifes failing Incorporated business with money they received from their joint tax return refund?
A: Yes, however, if this is being done pre-petition, the Bankruptcy Trustee may seek to avoid the transfer as a preferential transfer if this is done within one year of the bankruptcy filing (Sec. 547) or as a fraudulent transfer if this is done within two years of the bankruptcy filing.
Fraudulent transfer is Sec. 548
Such a transaction would be heavily scrutinized by the Bankruptcy Trustee (which doesn't mean you can't necessarily do it), but it must be done correctly so it cannot be avoided after your wife files for bankruptcy.
Also, is it safest to keep the joint tax refund/overpayment in the marital joint account of the husband and wife, or should it be moved into the husband's name only?
A: Joint account
Fritz,hat's the difference
So the bank with the UCC's on all of the equipment will be paid off in full?
Fritz, Your allowed to turn non-exempt property into exempt property correct? As long as it's purchased at fair market value and the money goes to pay off the secured lender of the purchased property correct? We plan to use Ebay (sold completed sale values) and a licensed appraiser in the state of PA for fair market value. Is there some law as to how we can spend the money in the joint account? Thanks!
Possibly, if it's done correctly and with enough lead time prior to filing the bankruptcy.
To be safe, you should do what you're contemplating (i.e. purchase business property with joint funds) at least two years and one day before the wife files for bankruptcy.
Make sure you didn't co-sign or execute any personal guarantees as to your wife's individual debts.
Also, keep in mind that creditors could still attach judgment liens to TBE property. Post-bankruptcy, these creditors would not be able to foreclose or replevy the property, but they would be the first in line to be paid should the property ever be sold.
What if property is sold and the money stays in the possession of theTBE? Can a lien be placed on our home or vehicles titled in TBE
The proceeds of the sale would go to satisfy whatever joint creditors held the judgment lien before any money would come back to you.
Here's a quick blog link from "QC Attorney" that explains this succinctly: http://qcattorney.blogspot.com/2011/11/tenancy-by-entirety.html
Please let me know if you have any other questions. Thank you.
I'm a bit unsure of your last post, not saying it is incorrect, just unsure after reading another law site here in PA. "Fritz : The proceeds of the sale would go to satisfy whatever joint creditors held the judgment lien before any money would come back to you "
I was under the impression property of the TBE in PA can't be encumbered and money can't be taken from the sale of a home when only one person has debt. I was reading this (link below) after I read your link. Still confused, honestly sill unsure about the TBE being encumbered or lien added for the debts of only one person. Would like a follow up. Gladly pay though.
After reviewing caselaw on the issue, I believe you are correct in that "property of the TBE in PA can't be encumbered and money can't be taken from the sale of a home when only one person has debt," although there are some limits to the protection provided by TBE. TBE will not provide protection if the bankruptcy filer has tax debts, or if both spouses are liable for a debt (i.e. a joint credit card or joint business debt).
See, e.g. State Farm Mut. Automobile Ins. Co. v. LINCOW, Dist. Court, ED Pennsylvania 2009 (finding Eagles Season Tickets exempt from execution as entireties property), here: http://scholar.google.com/scholar_case?case=2732141048868111193&q=2007+Pa.+Super+348+&hl=en&as_sdt=2,10
See also Plastipak Packaging, Inc. v. DePasquale, 2007 PA Super 348 - Pa: Superior Court 2007 (the case holding that "Courts in Pennsylvania view the proceeds of sale of property held as a tenancy by the entireties to be exempt from execution, even after deposited into the bank account titled only in the name of the debtor spouse," which the article you found above surprisingly failed to cite), here: http://scholar.google.com/scholar_case?case=16420633875323172845&hl=en&as_sdt=2,10
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