Things happen, people move. If you are connected to multiple states or you are planning to move around, you might wonder where you should be filing bankruptcy. You may also have filed for bankruptcy in one state previously and waited the required time period to file another bankruptcy in another state.
How do I pick where to file for bankruptcy?
There is a general rule that you should reside in the jurisdiction that you want to file in for the greater part of the last 180 days (6 months). 28 U.S.C. A� 1408(1). This means that you have to live in your location at least 91 (approximately 3 months) days before you file for bankruptcy in that location.1 Specifically, you should have your domicile, residence, principal assets, and principal place of business in that state for at least 91 days.2 If you move around states a lot, you should be able to file in the state where you resided longest in the last 180 days.3 Domicile means your actual residence and the residence you will return to after a period of absence.4 This is usually determined by a totality of circumstances if you move around a lot or have multiple places you stay in. A residence in this context is a permanent home.5
That being said, when you file for bankruptcy it is under the purview of the federal court. Since bankruptcy is a federal law, once you actually receive your Order of Discharge from the federal bankruptcy court it should be valid in any state.6 So while federal court has the jurisdiction over the case, where you file when you move states is a venue issue. Venue refers to the proper district or division where your bankruptcy petition should be filed.7
What about bankruptcy exemptions?
Bankruptcy exemptions vary in amount depending on the state that you file in. An exemption is an important amount in a Chapter 7 bankruptcy because it is the amount of an asset you are allowed to keep in an asset bankruptcy. Otherwise, the bankruptcy trustee will take the remainder of the asset and use it to pay off creditors. Some states use the federal exemptions, others allow you to choose between state or federal exemptions, and some make state exemptions mandatory. Arizona is one of the states that requires you to use state exemptions.
Some states also do not allow non-residents to use exemptions after they move away.8 In this case, you can opt to use federal exemptions.9 Otherwise, a state may allow you to use its exemptions based on the amount of time you have lived there. Use of exemptions usually depends on the bankruptcy filing date and where and for how long the petitioner lived for the two and a half years before filing for bankruptcy.10 Generally, if you live in a state for at least 730 calendar days (2 years) continuously before filing for bankruptcy then you can use the state’s exemptions.11 If you have not lived in the state for that long, you must pick the state where you lived most of the time during 180 days before the 730 days (i.e. where you mostly lived between two and two and a half years before filing).12
Call to speak directly with an experienced bankruptcy attorney in Phoenix to find out out where you file bankruptcy.
[1] Kathleen Michon, Filing Bankruptcy After Moving To Another State Or District, alllaw.com, http://www.alllaw.com/articles/nolo/bankruptcy/filing-after-moving-state-district.html (last visited Feb. 4, 2015).
2 When, Where & What To File, doney.net, http://www.doney.net/faq_whenwhere.htm (last updated Sep. 18, 2004).
3 Id.
4 Venue In Bankruptcy, (Where Your Petition Should Be Filed), sacramentolawgroup.com, http://sacramentolawgroup.com/sacramento-bankruptcy/venue-bankruptcy/ (last visited Feb. 4, 2015).
5 Id.
6 Robert Payne, Can I File A Bankruptcy In A Different State Than Where I Owe My Creditors (Jurisdiction Vs. Venue)?, robertpaynelaw.com, http://robertspaynelaw.com/myutahbankruptcyblog/2014/11/21/can-i-file-a-bankruptcy-in-a-different-state-than-where-i-owe-my-creditors-jurisdiction-vs-venue/ (last visited Feb. 4, 2015).
7 Venue In Bankruptcy, supra note 4.
8 Kathleen Michon, supra note 1.
9 Id.
10 William C. Spaulding, Residency Requirements For Exemptions, thismatter.com, http://thismatter.com/money/credit/bankruptcy/chapter-7/exemptions-residency-requirements.htm (last visited Feb. 4, 2015).
11 Id.
12 Id.
