## Facts

- Michael Eugene Sumy filed an individual voluntary Chapter 7 petition in March 1984.
- Sumy scheduled unsecured claims totaling $19,570.50, including $1,474.78 in debts owed jointly with his non-filing wife.
- Sumy listed a residence owned with his wife as tenants by the entirety, valued at $73,500, with approximately $20,000 in equity above the first deed of trust.
- Sumy claimed the equity as exempt under 11 U.S.C. § 522(b)(2)(B), asserting that entireties property was protected from creditors.
- Under Maryland law, entireties property is generally immune from separate creditors of one spouse but may be reached by creditors holding joint claims against both spouses.

## Issues

1. Whether the court of appeals had jurisdiction under 28 U.S.C. § 158(d) to review the district court’s order reversing the bankruptcy court on the exemption ruling.
2. Whether, under 11 U.S.C. § 522(b)(2)(B) and Maryland law, a Chapter 7 debtor may exempt entireties property when there are creditors holding joint claims against the debtor and the non-filing spouse.

## Decision

- The Fourth Circuit held it had appellate jurisdiction because the district court’s exemption ruling was sufficiently final in the bankruptcy context.
- The court reversed the district court and held that, in Maryland, entireties property is exempt under § 522(b)(2)(B) only to the extent it is exempt from process under nonbankruptcy law.
- Because Maryland law permits joint creditors to reach entireties property, the property was not exempt to the extent of joint claims.
- The case was remanded for administration consistent with this rule, permitting the trustee to administer the entireties equity for the benefit of joint creditors, but not for separate creditors.

## Legal Principles

- Under 11 U.S.C. § 522(b)(2)(B), a debtor may exempt a tenancy-by-the-entirety interest only “to the extent” that the interest is exempt from process under applicable nonbankruptcy law.
- When state law allows joint creditors of both spouses to reach entireties property, the bankruptcy exemption does not bar administration of that property to satisfy joint claims.
- Entireties property may remain exempt as against separate creditors of only one spouse where state law shields it from those creditors.
- Finality for bankruptcy appellate jurisdiction is applied pragmatically; an order conclusively resolving an exemption issue may be treated as final where it materially affects estate administration.

## Conclusion

The Fourth Circuit ruled that, in Maryland, § 522(b)(2)(B) does not allow an individual debtor to exempt entireties property from the bankruptcy estate to the extent there are joint creditor claims against both spouses, and it permitted the trustee to administer the property’s value for joint creditors while preserving protection against separate creditors.


Sumy v. Schlossberg, 777 F.2d 921 (4th Cir. 1985)