Where to File for Bankruptcy: Understanding Residency Requirements

Welcome to today’s blog post, which summarizes my YouTube video, which you can see below. In this blog post, I’ll discuss the issue of bankruptcy residency requirements as it can affect your case.

Residency Issues and Jurisdiction

When and where to file for bankruptcy is critical as it could significantly impact your case. Residency requirements are standard in the law, regardless of the area of law. For instance, you can’t move to North Carolina for a few days to get divorced and keep everything if you’ve lived in Florida for 25 years.

Most states have a six-month residency requirement; some even extend up to a year. Interestingly, Alaska has a two-day residency requirement I believe, which is unusual. Then again, getting to Alaska isn’t easy or cheap, regardless of where you reside.

Note, besides the residency issue, there’s also jurisdiction which is a separate subject. But to simplify, a court isn’t likely to rule on issues like custody and assets located in another state based on that fact pattern.

When it comes to bankruptcy, you need to consider where you live and which state’s laws are most favorable to you. Unlike other legal matters, bankruptcy allows you to apply the laws of the state where you resided previously. For example, if you’re getting divorced, you can’t live in Miami and use Georgia’s laws just because they’re more favorable. You’d need to live in Georgia for six months to do that. Bankruptcy is different in that regard, but there are two important dates to know.

Bankruptcy Residency Requirements

Bankruptcy residency requirements focus on two key dates: the 180-day rule and the 730-day rule. These rules determine which state’s exemptions you can use. For instance, Florida’s homestead exemption is unlimited, but you must have lived there for 730 days to take advantage of it. For example, having lived in northern Florida and southern Georgia, I know it’s common to live in one state but work in another. But work isn’t enough to establish residency.

In that case, if you live in Georgia, just because you work in Florida still means you have to apply the exemptions of Georgia, which are not as generous as Florida’s homestead exemption. Georgia’s homestead exemption is $21,500. For that reason, more Chapter 13 bankruptcies are filed in Georgia than in Florida.

Let’s say you want Florida’s homestead exemption, so you sell your house in Georgia, move to Florida, and buy a new home just a few feet from the Georgia state line. You can file for bankruptcy in Florida after being there for at least 91 days out of the last six months, but you’ll have to apply Georgia’s laws. To use Florida’s exemptions, you must live there for 730 days.

Depending on your situation, this may work to your advantage. For example, if you relocate to another state, and let’s continue with Florida as an example, it could take a while for creditors to find you. You could wait two years and then file for bankruptcy to protect your home’s equity. Which situation is best for you depends, so you have to know the exemptions of both states.

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For example, Texas has a $7,500 exemption for cars. If you move to Texas and your vehicle is paid off, you can protect up to $7,500 of its value after residing there for more than 730 days. However, if you lived in Texas and moved to Florida, you might want to wait 91 days and file in Florida using Texas laws to protect your car’s equity better.

Florida does offer $5,000 as the motor vehicle exemption. That was a recent change in the law earlier this year, but since 2005, it was only $1,000, so you can see how timing is critical in bankruptcy cases.

But when and where to file depends. So, always compare the exemptions of both states to decide which is more favorable. Sometimes, waiting two years is the best option, while other times, filing after 91 days might be more beneficial.

This blog post helps explain residence issues in bankruptcy. You can watch the full video below.

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. For paralegals and students buying single copies, you can do so via Amazon Books. To access my YouTube channel, click this link.

Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.

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