Protect Your Home

DeKalb County Courthouse | Sycamore, Illinois

There are legal steps you and your spouse can take to protect your home from creditors. In Illinois, a married couple can structure how they own their home under a legal form called "tenants by the entirety" or TBE. This means that the creditors of one of the spouses cannot collect on debt by placing a lien on the home, if it is owned by both the husband and wife.

At Petti Murphy & Associates, we will explain all of your options in sheltering your home under a TBE, as well as other strategies for protecting your assets from creditors. We provide the solutions and answers you need.

Call our law firm today in Geneva at 630-457-1691. We help people throughout the greater Chicago and Tri-Cities areas.

Sheltering Your Home By Establishing A Tenant By Entirety

Where the marital residence is not owned in TBE, if one spouse were to incur large credit card or business debt, or get sued for causing an auto accident, and there was inadequate insurance coverage, the creditor or injured person might obtain a large judgment against the debtor spouse. The creditor or injured person could then collect on that judgment by placing a judgment lien on the debtor spouse's marital residence. This might then be followed by a foreclosure and forced sale of the marital residence to satisfy the claim. The married couple has lost their home, even though one of the spouses had no creditors, was innocent and was not responsible for the claim!

Tenancy by the entirety is a form of ownership only available to married persons while their marriage is intact. Also, in Illinois TBE ownership is only recognized for the marital homestead, that is, where the married couple are living and maintaining their permanent residence. (In some states, such as Florida, all properties, real estate and personal property, come under the TBE umbrella while the marital relationship exists. Florida TBE is not limited to the marital homestead, as is the case in Illinois.)

An important caveat! TBE ownership does not immunize the marital residence against the claims of joint creditors, only creditors of one or the other of the spouses. This is a very important distinction. Creditors of both spouses jointly are able to reach the married couple's equity in their marital residence.

However, in the above examples if the innocent spouse owned the marital residence as a tenant by the entirety, the marital residence would be completely exempt from the creditor's or injured person's claim since the examples involve claims that are not joint obligations of the husband and wife, together.

If married couples are buying a home, they should take title as tenants by the entireties, not joint tenancy or tenants in common. If your current deed does not now specify TBE as the form of joint ownership, you are able to reissue and rerecord your marital residence deed, granting the property to you and your spouse as a changeover to TBE. But you cannot do this changeover at a time and with the intent to avoid known pending creditors' claims. That would be fraudulent and the transfer into TBE could be voided. You need to make the TBE changeover while you have no substantial creditors and are solvent. Moreover, special rules may apply in bankruptcy proceedings under the U.S. Bankruptcy Code.

Our law firm is experienced with legal issues related to this form of property ownership. TBE ownership is a very inexpensive way to protect your most valuable asset, and it can be done quickly at modest costs. Call PETTI MURPHY & ASSOCIATES today to learn more!