Yes, you can file bankruptcy after moving, but it may get a little more complicated. In this article, we will discuss the timing issues and other factors that may accompany a recent relocation.
In the state for less than 90 days
One of the requirements to begin a legal proceeding like bankruptcy is to file your case with the proper Court. Each Court has the authority to decide legal matters in a particular geographic region as well as over specific types of legal matters. In legal terms, this is called the Court’s jurisdiction. Bankruptcy law is federal law, so the proper jurisdiction would be in federal Bankruptcy Courts, which exist in every state. Usually finding the proper Court is fairly straightforward, simply file in the state where you live. If you have moved recently, however, it can be a little more complicated.
The general rule is that you need to have lived in your new state for the majority of the past 180 days, or at least 91 days, to file your bankruptcy in the new state. There is no specific rule for exactly when to start your 90-day residency count, rather the Court will look to verify your claimed state of residency with information that you provide in your official bankruptcy paperwork. There is also no specific document that will prove your residency, but you could provide items like your apartment lease agreement or utility bill account to support your claim. If you have not been in your new state for the minimum period, the best course of action may be to postpone filing until the 90 day threshold has passed.
So why does this all matter? It matters because of exemptions. Exemptions are the protections offered in a bankruptcy case that determine what assets (property) you can keep. Each state has its own exemption laws and the protection amounts can vary. There are also federal exemption rules which exist and some states allow you to choose between federal and state exemptions.
Which state exemptions can I use?
It all comes down to how long you have lived in a particular location. You need to have lived in the state where you file for at least 730 days (two years) to qualify to use that state’s exemptions. If you do not meet the 730-day rule then the Court will employ the 180-day rule. The 180-day rule looks to where you lived in the 180 days (six months) before the two years prior to filing your bankruptcy. Under the 180-day rule, you can use the exemptions for the state where you lived the majority of those 180 days. This may sound confusing but it boils down to looking at the six month period that began two and a half years ago before you filed your case.
Is it possible to still use my previous state’s exemptions?
Possibly. It depends on whether your previous state allows non-residents to use their exemptions after they have moved. If it is permitted you can use (and would be limited to using) your previous state’s exemptions when in the scenario above you have not resided in your new state for two years before filing your bankruptcy and you lived in the previous state for the majority of the six month period beginning two and a half years ago.
What about federal bankruptcy exemptions? When can I use those?
If you find yourself in the above scenario where your previous state does not allow prior residents to use its exemptions and you have not lived in the new state long enough to use theirs (sometimes referred to as “no man’s land”) then you will be permitted to use the federal bankruptcy exemptions.
Does it make sense to hire a lawyer for your case?
As you can see from the discussion of the various rules about residency and Court jurisdiction things can get a little complicated when you are contemplating bankruptcy after a move. Depending on how quickly you might want to file your case, it may make sense to consult and/or hire a bankruptcy attorney to help you figure out the details. If you do decide to consult an attorney Upsolve can help you find one. If you’re able to wait until there is no question about your residency and what exemptions you can use, you may be able to handle your bankruptcy on your own with a trusted partner like Upsolve. If you are worried about being sued in the meantime or have concerns about collection letters, keep in mind that, as a general rule, individuals can stop making payments on bills they intend to discharge in bankruptcy 90 days before filing.
What if I’ve already started my Upsolve questionnaire? What are my next steps?
If you already started your Upsolve questionnaire you may have been stopped if you stated you recently moved, will move, or have not lived in your new state more than 90 days. Once you have passed the 90+ day residency threshold you should be able to resume your questionnaire. If it has been longer than 8 weeks since you started the questionnaire, you may be asked to restart your questionnaire to ensure the forms you will file with the Court are as accurate as possible. Please contact Upsolve by visiting help.upsolve.org and using the "Submit a Request" feature in the top right corner to send us a message if you have any issues resuming or restarting your account!