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What happens to the house if only one spouse files bankruptcy? Unless the other spouse agrees otherwise, nothing. Mo. Rev. Stat. section 513.475.2 provides that neither spouse may sale, mortgage or alienate the marital home unless the other spouse agrees. Any attempted transaction is null and void. Also see In re Anderson, 12 B.R. 483 (Bankr. W.D. Mo. 1981), which held that a creditor may only recover against property held by spouses as a tenancy by the entireties when the other spouse consents.
– ksmolawyer
 Kansas City area residents should pay particular attention to the recent Michigan Bankruptcy Court’s opinion in In re Gosnick. In Gosnick, a debtor filed for bankruptcy under Chapter 7 and sought to protect property located in Alabama through Michigan’s bankruptcy exemptions. Interpreting a statute similar to the Missouri exemption I detailed in a previous post, the Court held that Michigan’s exemptions to do not apply to out-of-state property.
Living right on the border of Kansas and Missouri, Kansas City residents should pay particular attention to this holding. It may be advantageous to file now or to wait, if a move is contemplated, depending on the debtor’s individual situation. Consulting with an experienced Kansas City bankruptcy attorney prior to filing might save the debtor unneeded stress and, more importantly, property.
– ksmolawyer
Last night, the United States House of Representatives passed H.R. 1106, also known as the Helping Families Save Their Homes Act of 2009, by a vote of 234-191. This bill would allow bankruptcy judges to reduce mortgage payments by adjusting principal balances and interest rates. The bankruptcy judge could then “cramdown” these reduced principal balances and adjusted interest rates to the lender.
The purpose of the bill is to reduce home foreclosures by making mortgage payments affordable to the homeowner. To qualify, however, the owner must try to negotiate a voluntary loan modification with the lender before filing for bankruptcy. Homeowners should contact an experience bankruptcy attorney to address such pre-filing concerns as proving that these negotiations were attempted.
Kansas Representative Dennis Moore (D) voted in favor of the bill while Jerry Moran (R), Lynn Jenkins (R), and Todd Tiahrt (R) all opposed.
As for Missouri, Wiliam Clay, Jr. (D), Russ Carnahan (D), Ike Skelton (D), and Emanuel Cleaver (D) supported the bill, and Todd Akin (R), Sam Graves (R), Roy Blunt (R), Jo Ann Emerson (R), and Blaine Luetkemeyer (R) opposed.
To see the voting record, click here.
– ksmolawyer
Recently, Kansas City Divorce Attorney Mark Wortman posted a concise summary of a recent opinion by the Missouri Court of Appeals regarding the creditor and bankruptcy protections provided by joint ownership in the form of Tenancy by the Entireties. In light of the current economic turmoil, this post seems extremely timely, and I have decided to provide my own summary below.
 In Missouri (but not in Kansas), married couples may hold property in special form of joint ownership called Tenancy by the Entireties. Instead of the spouses being recognized as joint tenants each holding a 50% interest in the property, Tenancy by the Entireties treats each spouse as owning an undivided 100% interest in the property. In other words, the spouses are treated as one. Under Missouri law, there is a rebuttable presumption that property jointly owned by spouses is held as a tenancy by the entirety. A party may rebut this presumption by showing that the weight of the evidence leaves no doubt that the property was not held as a tenancy by the entirety. Additionally, spouses may severe a tenancy by the entirety by consent, agreement, or acquiescence.
As Mr. Wortman stated creditors of only one spouse, may not seek satisfaction of their debts against tenancy by the entirety property. Similarly, “tenancy by the entirety property is . . . exempt in bankruptcy provided that only one spouse is filing.” This exemption does not apply when both spouses file for bankruptcy.
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