Bankruptcy: A State Specific Law?

31 May Bankruptcy: A State Specific Law?

The bankruptcy law is a federal law. In fact, the U.S. Constitution mandates that Congress enact uniform bankruptcy laws. Doesn’t that mean that an article written about bankruptcy in Virginia will apply in Arizona? Unfortunately, no: the law differs greatly from State to State.

The main structure of bankruptcy law is federal passed by Congress and administered by the Federal Court system. But, in spite of the uniform system, there are many provisions that rely on state law. For example, the exemption structure to determine what property does not become part of a chapter 7 bankruptcy estate is determined by the state. To be sure, the federal law has an exemption structure, but each state is free to accept it, reject or offer alternatives!

What all this means is that in California, the homestead exemption can be $50,000, $75,000 or $150,000; in Texas it can be unlimited, and in Oklahoma, it can be as little as $10,000.

There are several other areas that depend on state law; some obvious and some hidden. So, the rule here is that although there is a great deal of wonderful information available, before you rely on any of it, best to check with a qualified bankruptcy attorney in your state.

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Douglas Jacobs is a California bankruptcy attorney and partner in the Chico law firm of Jacobs, Anderson, Potter & Chaplin. Since 1988, Mr. Jacobs has taught Constitutional law and Debtor-Creditor/Bankruptcy law at the Cal Northern School of Law. He has served as Dean of Students since 1994. He is a frequent lecturer on the subject of consumer bankruptcy law, and has spoken at both state and national levels.
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