Filing Bankruptcy After Moving to Another State or District

For a variety of reasons, many people find themselves needing to file bankruptcy after they've just moved to a new county or state.  The question is then posed: how will such a move affect my ability to file bankruptcy?

The general rule is that one must reside in the jurisdiction that they wish to file bankruptcy for the greater part of the last 180 days (28 USC §1408(1)).  In other words, you must have lived in your current location for at least 91 days before you can file bankruptcy there.  After that, you can file bankruptcy where you live, but with a few strings attached.

Where were you 730 days before filing . . . and then some?

If you have lived in the same state as your current jurisdiction for the last 730 days before filing, you can use your current state's bankruptcy exemptions to protect your assets from seizure by the trustee.  If you haven't lived in your current state for the 730 days before filing, the court will look to where you lived for the greater part of the 180 days *before* the 730 day period prior to filing.  So, for example, let's say you currently live in Florida, but have only lived there for 638 days.  In this scenario, you can file bankruptcy in Florida, but you can't use Florida's exemptions since you haven't lived in Florida the requisite 730 days.  However, if 730 days (or almost exactly 2 years) before you filed bankruptcy you lived in Texas, and for the 91 days before that you lived in Texas as well, then you would be permitted to use Texas's exemptions.

Which exemptions you use are important, since bankruptcy exemptions vary widely from state-to-state, and even from the state-to-federal level (federal law has it's own exemptions, too).  If you have $10,000.00 in personal assets, and you use Florida exemptions, your personal property exemptions, as an individual filer, will likely be limited to $6,000.00 or less.  Here, the trustee may end up taking $4000.00 or more of your personal property.  If, on the other hand, as an individual filer, you use Texas's exemptions, you'll be provided with $30,000.00 in personal property exemptions; with $10,000.00 in personal assets, the trustee will not be permitted to take anything!  Obviously, that's a huge difference.

No man's land

In the scenario above, Texas will permit a non-resident to use its exemptions; in fact, this is Texas's current rule.  But not all states permit their former residents to use state exemptions *after* the former resident has left the state.  Indeed, some states, like New York, do not allow non-residents to use their exemptions after they have moved away.  So what's a bankruptcy debtor to do if they can't use their current state's exemptions *or* their former state's exemptions?

Fortunately, the bankruptcy code has a solution.  Under 11 USC §522(b)(3)(C), if a state's domiciliary requirement renders a debtor ineligible for *any* exemptions, the debtor may elect the federal exemptions.  In other words, if you were a former resident of New York, but couldn't use their or your current state's exemptions, you could use the federal exemptions instead since New York does not permit non-residents to use its exemptions.

Get a lawyer

As always, before applying the above rules, consult with an attorney in your location to see which applications provide you with the best possible outcome.