If you have recently moved and you need to file bankruptcy, you may worry that there are no bankruptcy protection laws that apply to you as a new resident. Learn when and where you can file for the protection of bankruptcy after a move out of state and which exemptions you can legally use to protect your property during bankruptcy.
Can I File for Bankruptcy If I Moved Recently?
In most cases, bankruptcy is filed in the closest bankruptcy court. And the filer uses their home state’s exemption laws to determine which property is protected during bankruptcy. However, the rules are a bit more complex if you recently moved out of state. The federal court location at which a petitioner files is determined by venue rules. However, the state exemptions that apply are determined by exemption domicile rules.
Where Do You File Bankruptcy If You Recently Moved?
Filers are required to reside in the jurisdiction they file for the majority of the past 180 days. So, before filing in any specific location, a petitioner must live in that location for at least 91 days. After residing in a place for 91 days, a resident is eligible to file bankruptcy in their new area. After using the general jurisdiction rule to determine where to file your bankruptcy, you still need to determine which state’s laws will be used to determine your bankruptcy exemptions, which protect your property.
Which Exemptions Apply to Your Bankruptcy Case After a Recent Move?
During bankruptcy, you don’t lose everything you own. Bankruptcy exemption laws are in place to create protections for specific types and amounts of property. If you recently moved before filing bankruptcy, the court will consider where you “domiciled” before filing to determine which state’s exemptions laws apply to the bankruptcy case.
Determining Your Domicile for Bankruptcy Exemptions:
A filer’s domicile is the place they consider their permanent residence. For example, where you are registered to vote, where you pay taxes, and where you intend to set down roots to create a permanent home. In most cases, an individual’s domicile is where they currently live, but this isn’t always the case. For instance, if you live in California but are temporarily relocated to Tennessee for a work project, your domicile is still California for the purposes of determining bankruptcy exemptions.
The 730-Day and 180-Day Rules:
The 730-Day Rule: If you have been domiciled in the current state for a 730-day (two-year) period before filing bankruptcy, you can use that state’s exemption system. If you file bankruptcy and haven’t lived in the same state for 730 days, the 180-Day Rule applies.
The 180-Day Rule: If you didn’t “domicile” in the same state for the 730 days preceding bankruptcy, you must use the bankruptcy exemptions for the state you lived in for the better part of the 180 days prior preceding the 720 days before you filed bankruptcy.
The 730-Day and 180-Day rules are intended to keep people from moving to a particular state to access advantageous bankruptcy exemptions. The bankruptcy code offers a solution if the rules result in a bankruptcy petitioner not being eligible for any state’s exemptions. Petitioners ineligible for any state’s bankruptcy exemptions based on the 730-Day and 180-Day rules can elect to file using federal exemptions.
Determining how bankruptcy law will apply to your case can be complex, and we want to help. If you have questions about bankruptcy and how filing bankruptcy could help your family, please don’t hesitate to contact Ken Rannick. You are in good hands with Kenneth C. Rannick P.C.