How Soon Can You File for Bankruptcy After Moving to a New State?
Moving to a new state involves many adjustments, from new local laws to finding a place to live. But what if you’re also considering filing for bankruptcy? It turns out that timing and jurisdiction are critical factors that could influence your case. Consulting with a Los Angeles bankruptcy lawyer can help determine when to file after moving to California and which exemptions would apply to your consumer bankruptcy case.
Geographic Limitations on Bankruptcy Court Jurisdiction
Every court has a particular jurisdiction, or the authority, to handle specific legal matters within a designated area. Bankruptcy falls under federal law, which means that only federal courts have the jurisdiction to hear such cases. Usually, determining the correct court is simple: you file in the state where you reside. However, jurisdiction becomes more complex if you’ve recently relocated, as bankruptcy courts may not immediately have the power to handle your bankruptcy case in your new state.
How Long Do You Have to Wait to File?
To file for bankruptcy in your new state, you must have resided there for most of the past 180 days—at least 91 days. Courts generally don’t pinpoint an exact starting date for this 90-day residency count. Instead, they’ll corroborate your claimed state of residency using the details you submit in your official bankruptcy paperwork. While there’s no singular document to establish your residency, you can utilize your lease agreement or utility bills to verify your duration of residence. If you haven’t fulfilled the minimum residency requirement, it’s advisable to delay filing until you reach the 91-day mark. Otherwise, you would have to file in your previous state, which could entail travel for your creditors’ meeting and other complications.
Why Recent State Relocation Matters in Bankruptcy Filings
Apart from jurisdictional reasons, moving states can also impact which exemptions you’re eligible for, potentially affecting the assets you can keep during bankruptcy. Exemptions refer to the assets and property you can protect from being liquidated to repay creditors. The type and amount of exemptions you can claim depend on state laws, which brings us to the next point.
State Laws and Exemptions
Usually, you’ll apply the exemptions of the state where you’re filing your bankruptcy case. However, some states require you to have been a resident for longer before you can use their exemptions. This leads many people to ask whether they can apply the exemptions from their previous state.
Using Exemptions from Your Previous State
In certain instances, yes, you might be able to use your former state’s exemptions, but this generally depends on specific state laws and how long you lived there.
California-Specific Residency Requirements for Bankruptcy Exemptions
In California, like most other states, you can file for bankruptcy if you have resided in the state for a minimum of 91 days of the past 180 days. However, the rules get more nuanced regarding bankruptcy exemptions—those all-important legal allowances that protect certain assets from being seized to pay off creditors.
To be eligible to use California’s bankruptcy exemptions, you must have resided in the state for at least two years or 730 days. If you file for bankruptcy before this two-year mark, the exemptions from your previous state of residence will apply.
The catch is that you’ll only be able to use your former state’s exemptions if its laws permit non-residents to claim them. If the laws of your previous state restrict non-residents from using its exemptions, then you would have to wait until you’ve been a California resident for 730 days to apply California’s exemptions.
It’s worth noting that some states, including California, have provisions that do not limit their exemptions only to residents. Other states with similar flexibility, albeit with some limitations, include:
– North Dakota
– West Virginia
Federal Bankruptcy Exemptions: An Alternative Route
If you are in a tricky situation regarding state exemptions, consider using federal bankruptcy exemptions. Federal exemptions can also offer more generous protection for assets like retirement accounts.
Contact Wadhwani & Shanfeld
Given the intricacies of jurisdiction and exemptions, consulting with Wadhwani & Shanfeld can be invaluable. Let our bankruptcy expertise guide you through the maze of laws and procedures, ensuring you’re not inadvertently forfeiting assets or complicating your case.