A Judgment Lien on Entireties Property Isn’t Avoidable in Illinois, Seventh Circuit Says
Most of us would assume that a home owned by a married couple as tenants by the entireties would be exempt in all respects in all states. But no, that is not true in Illinois and states with similar laws, according to the Seventh Circuit.
In Illinois, a homestead owned as tenants by the entireties cannot be foreclosed and sold by a judgment lien creditor of one spouse, but the entireties interest is not entirely exempt, the Chicago-based appeals court says.
Consequently, a spouse cannot avoid a judgment lien on his or her contingent future interest in the home because that interest is not exempt in Illinois. In other words, a judgment lien that attached to one spouse’s contingent future interest in a homestead survives bankruptcy in Illinois.
In his August 5 opinion for the appeals court, Circuit Judge William J. Bauer warns that state laws vary dramatically on entireties property, so the result will not be uniform throughout the U.S.
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