Your understanding of bankruptcy exemption analysis may be correct as far as it goes, but it is incomplete. Much too much is at stake here to rely on a public forum like Avvo on this issue. Consult local experienced bankruptcy counsel before any more time passes. Ask counsel to research whether NJ exemptions apply extraterritorially. If not, you may be dealing with the federal exemption scheme. With a house at stake, you cannot afford inaccuracy on this issue.
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Interesting question. While your situation may be substantially different from my previous clients, I can send you a ruling by Chief Bankruptcy Judge Hyman in which my client prevailed in a similar situation because the non-debtor spouse held an interest in the homestead as tenants-by-entireties. My email address is firstname.lastname@example.org. I have a rather busy week but may be able to dig out the case by Wednesday or so. Send me an email reminding me of this question and I shall try to get that ruling to you.
Posting questions anonymously and receiving general answers do not substitute for consulting with an attorney licensed to practice in the jurisdiction in which you live. Answers posted here by Kevin C Gleason are only intended for general education of the public on legal matters. Please consult a qualified professional before deciding what to do about your situation.
The general idea you have portrayed is correct, however bankruptcy law is extremely fact oriented and the issues with the IRS raise some other concerns that may not totally be addressed. This is something that must be analyzed in depth with a bankruptcy attorney before proceeding. If saving the property is the number one concern, then meet with a bankruptcy attorney, such as myself, in order to find out the best route.
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There are several issues that should be explored fully with an attorney. Has IRS filed a notice of lien? What was the source of the funds to buy the home? Tenancy by the entireties can help you, but not as to IRS.
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