However, under the N.Y. Eastern District Court decision, in In re Levinson,1 the ability to utilize this section to facilitate a Debtor’s fresh start has been meaningfully eroded. It is submitted that both logic as well as a rapidly expanding body of case law outside of the Eastern District of New York would suggest that a re-analysis of the holding of Levinson may be timely.
The District Court affirmed the Bankruptcy Court decision in rejecting his position, reasoning that, because a tenancy by the entirety, as distinct from a joint tenancy or tenancy in common, exhibited the unique characteristic that both spouses “were deemed seized of the whole,” the value of the Debtor’s interest was equal to 100% of the equity. The Court stated that “a tenancy by the entirety is described in Law French as being per tout et non per my, by the whole and not by the share (motety), meaning each holds the whole or entire interest and lacks the power to alienate an undivided share.”3
Recent bankruptcy court decisions interpreting New York tenancy by the entirety law have held that the Levinson decision evidences a basic illogic insofar as it does not follow from the premise that the spouses together hold an undivided interest in their homestead, that the value of each of their interests is similarly 100%.6
Mathematically, the total must always equal the sum of its parts. To the extent that husband and wife each hold a recognizable interest in property their respective individual interests must necessarily equal something less than the whole. To hold otherwise would invite havoc in those instances where wife and husband file separate and non-joint petitions for bankruptcy relief. Surely, neither of their separate trustees can administer the whole of property held by the entireties, but must accept an allocation as between the two estates. Exemptions,.if claimed, would then apply to the allocated interest of each spouse. Similarly, where only one spouse files, he or she may exempt an aggregate interest in that same allocation.”7