In Re Bradby, 455 B.R. 476

Bradby filed a Chapter 13 petition on June 4, 2010; property at 8708 Little Elam Road, Charles City County, VA is owned with husband as tenants by the entirety.
Value of the Real Property is $60,700 with a $17,000 lien, leaving equity about $43,700.
Bradby claimed the Real Property as exempt on Schedule C under 11 U.S.C. §522(b)(3)(B) due to tenancy by the entirety.
Bradby’s husband died in August 2010, before plan confirmation.
Bradby’s Chapter 13 Plan proposes $185 per month for 54 months, yielding a 5% dividend to general unsecured creditors.
Trustee filed objections to exemption and to plan confirmation under §1325(a)(4), arguing the tenancy by the entirety equity should be included in liquidation analysis and that Ballard limits the exemption.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether tenancy by the entirety can be exempted post-petition	Bradby – exemption under §522(b)(3)(B) survives after spouse’s death	Bates – Ballard controls; survivor’s interest becomes estate property post-death	Yes; exemption allowed despite spouse’s death
Whether death terminates tenancy by entirety for exemption purposes	Exemption survives as to interest held immediately before case	Death converts survivorship interests to estate property not exempt	Death does not defeat exemption; tenancy by entirety status preserved for exemption
Whether post-petition events create new property interests subject to estate ownership	Exemption removes property from estate; no new postpetition interest acquired	Estate could acquire postpetition interests under 541(a)(5)/(7) and 1306	Postpetition events did not convert or create a new exempt interest; exemption remains valid
Whether the Chapter 13 liquidation test requires including exempted equity in distribution	Exempt equity not counted for liquidation test under 11 U.S.C. §1325(a)(4)	Equity should be considered as estate value for liquidation analysis	Liquidation test satisfied with exemption; plan confirmed

In re Ballard, 65 F.3d 367 (4th Cir. 1995) (survivor's remainder interest converted; Ballard distinguished on exemption claim)
In re Birney, 200 F.3d 225 (4th Cir. 1999) (exemption preserves tenancy by entirety status post-exemption)
Chippenham Hosp., Inc. v. Bondurant (In re Bondurant), 716 F.2d 1057 (4th Cir. 1983) (tenancy by the entirety property forms part of estate interests)
Napotnik v. Equibank and Parkvale Sav. Assoc., 679 F.2d 316 (3d Cir. 1982) (estate inclusion of entirety interest; settler principles)
Pitts v. United States, 242 Va. 254, 408 S.E.2d 901 (Va. 1991) (tenancy by the entirety defined by unity requirements; immune from individual creditor claims)
Vasilion v. Vasilion, 66 S.E.2d 599 (Va. 1951) (tenancy by the entirety immune from a single spouse’s creditors)
Sumy v. Schlossberg, 777 F.2d 921 (4th Cir. 1985) (entireties property administered for joint creditors; but exemption preserves survivorship)
In re Ballard, 65 F.3d 367 (4th Cir. 1995) (distinguishes Ballard on entitlement to exemption vs. creditor pursuit)