Playing the Odds

In many states, including Virginia, a home, held as a "tenancy by the entirety," which is standard for homes purchased by a husband and wife, is exempt from creditor process for the debts of only one of the couple. This does not hold if it is a joint debt. In this case, both the debtors, husband and wife, had substantial joint debts, but if they filed together their home, which had significant equity, would have been seized in Chapter 7. Chapter 13 was not a viable option because there was too much equity to pay off with the income they had, even in a five year plan.

A closer look however revealed that many of the so-called joint debts on the credit report were misreported. In fact, credit card holders were reporting "authorized users" as "joint debtors." Only one of the debts was probably joint, we figured. The rest belonged to the husband, and even that debt, the husband was willing to contest its validity as a joint debt. A Chapter 7 was filed for only the husband. The trustee did not notice or did not bother with attempting to sell the house for the benefit of the one joint debt.