Man lives in Idaho with his wife. Man borrows money. He can’t pay back the money. He and his wife move to Florida where they buy a house and open a joint bank account. The man files Chapter 7 bankruptcy. Is the bank account exempt as tenant’s by entireties property?
The general rule in Florida is that bank accounts owned jointly by the bankruptcy debtor and his non-filing spouse are exempt as tenants by entireties property. The above fact situation is complicated by the fact that Idaho is a community property state. In most community property states the law provides for co-equal management of community assets and that when either spouse incurs a debt for the benefit of the marital community the creditor may seek satisfaction of his unpaid debt from all community property; the rule is the opposite of our tenancy by entireties concept of marital property.
Under Florida’s tenancy by entireties rule the couple’s joint property is not protected from debts incurred by the two spouses jointly. In the Idaho example a creditor could argue that because the man incurred the debt in a community property state that debt is a joint debt which could be satisfied from jointly owned entireties property in Florida.
I have little experience with community property issues. My understanding is that there is no concept of “community debt” such that a debt incurred by one spouse obligates repayment by the other spouse and makes the debt a “joint debt.” I understand that community property refers to the assets from which a creditor can recover a debt by either spouse for the benefit of the marriage, but that it does not make all debts in the marriage joint debts. If my understanding of community property is correct then the Idaho debtor can protect bank accounts and other Florida assets owned jointly with his non-debtor spouse.