Does it matter where I file my bankruptcy case?

March 2, 2010

Yesterday, we explained how clients have a choice where they might file their bankruptcy case. For example, they could file a bankruptcy case:

where they live
where they have their principal place of business
where they have their principal assets in the United States

Beyond that, they can even file a bankruptcy case where an affiliate of theirs has already filed a bankruptcy case. For example, a corporation solely owned by a person files a files a bankruptcy case in Wisconsin, where its principal place of business is located. So that person may also file a bankruptcy case in Wisconsin as an affiliate of his corporation even though he lives in Illinois or even some other state.

Why might it matter?

Well, the bankruptcy law is supposed to be the same in every one of our 50 states. But interpretations do vary from court to court. And interpretations of the law as well as practice and procedure may vary a lot from circuit to circuit – there are 11 of those, plus the District of Columbia Circuit in the United States.

There could be other differences from state to state too. But that’s another subject for another day.

Big businesses think carefully about where they will file their bankruptcy cases. It’s called forum-shopping That’s why so many big cases are in New York and Delaware. People should think carefully too. Talk to your lawyer about where you will file your bankruptcy case. It could make a big difference to you.

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Jay Fleischman, Esq.

Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.