To cram down property owned jointly, both spouses have to file a Chapter 13 bankruptcy. The Bankruptcy Court for the Southern District of Florida held recently that a Chapter 13 debtor whose spouse does not join in the debtor’s bankruptcy petition is not permitted to cram down a claim secured by a lien on property owned by the debtor as a tenant by the entireties. If the debtor were allowed to cram down the claim, the court reasoned, his nonfiling wife would be granted the benefit of having filed for bankruptcy without having to carry any of the burdens, and the Code does not permit this. In re Alvarez, 2012 WL 1425097 (Bankr. S.D. Fla., April 24, 2012).
Another approach is that the non-filing spouse could quit claim their interest in the property to the debtor. That way when the debtor files the bankruptcy, he or she is the sole owner of the property. We have found this works just as well.
Transfers of property especially shortly before filing a bankruptcy is a complex matter and should only be done after consultation with a qualified bankruptcy attorney. For a free consultation, please consider Christie D. Arkovich, P.A.