544 B.R. 568
Bankr. D. Md.2016Background
- Debtor Maria Conrad filed Chapter 7 on June 24, 2015 and claimed her interest in real property at 2146 Duckwalk Court as held tenants by the entireties with her husband.
- Prior to bankruptcy, Debtor pled guilty to conspiracy and a federal court entered a Restitution Judgment against her alone for $838,004.60 on December 4, 2009.
- Debtor claimed her entireties interest exempt under 11 U.S.C. § 522(b)(3)(B) to the extent it is exempt from process under applicable nonbankruptcy law.
- Trustee objected, arguing federal law (18 U.S.C. § 3613) — like the federal tax lien statute in United States v. Craft — permits attachment of a sole-restoration debtor’s entireties interest.
- The government’s restitution enforcement scheme (18 U.S.C. § 3613) treats restitution liens "as if" they were tax liens and allows enforcement against "all property or rights to property."
- The court sustained the Trustee’s objection, holding federal law is the applicable nonbankruptcy law and the Debtor’s entireties interest is subject to process under § 3613 and thus not exempt under § 522(b)(3)(B).
Issues
| Issue | Plaintiff's Argument (Trustee) | Defendant's Argument (Conrad) | Held |
|---|---|---|---|
| Whether "applicable nonbankruptcy law" under § 522(b)(3)(B) is federal law for a restitution judgment | § 3613 governs enforcement; federal law applies and can reach entireties interests like tax liens | Entireties exemption under Maryland law protects Debtor’s interest from individual creditor process | Federal law (18 U.S.C. § 3613) is the applicable law for the restitution judgment enforcement |
| Whether a restitution lien under § 3613 can reach a tenant-by-entireties interest owned jointly with spouse | § 3613’s language mirrors the broad tax-lien language; Craft’s reasoning applies so the lien reaches the debtor’s shares of entireties property | Craft applies only to tax liens and not restitution; state-law protections should bar attachment | Court applies Craft’s rationale: § 3613 reaches "property or rights to property," so entireties interest is subject to process |
| Whether failure to file a notice of lien under § 3613(d) prevents Trustee from administering the asset | Notice/perfection issues aside, the substantive question is whether the interest is exempt; lien arose at judgment entry | Debtor argued lack of a filed notice undermines enforcement against property | Court: perfection does not determine the exemption question; lien arose at judgment entry and exemption governed by federal law |
| Whether payment schedule in the Restitution Judgment limits enforcement to periodic payments | Plea agreement and judgment state schedule is a minimum and the Government may enforce immediately under § 3613 | Debtor relied on scheduled monthly payments language | Court: schedule is not limiting; judgment is immediately due and subject to enforcement under § 3613 |
Key Cases Cited
- United States v. Craft, 535 U.S. 274 (superseding federal tax lien can attach a spouse’s tenants-by-the-entireties interests)
- Sumy v. Schlossberg, 111 F.2d 921 (4th Cir.) (state-law principle that individual creditors cannot levy on entireties interests)
- In re Bell-Breslin, 283 B.R. 834 (Bankr. D. Md.) (Maryland law protects entireties interests from levy by individual creditors)