31 Jan Ten Reasons to Delay Filing Bankruptcy! Reason No. 2: Debtor’s Domicile
Relocating to a new state?
Then changes inthe 2005 amendments to the Bankruptcy Code, known as the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) regarding State domicile requirements willbe a factor in determining whichbankruptcy exemptions you can use.
Exemptions determinethe things you get to keep when you file a bankruptcy.Those things, referred to as “exempt property” are not available to be administered (sold) to pay of unsecured debts. For most individuals, much if not all of their belongings are exempt in a bankruptcy.
Generally speaking, a domicile is defined as the place where a person lives and intends to remain. You can have many residences, but only one domicile.
Under the pre-BAPCPA Bankruptcy Code, the debtor generally had to be domiciled in a State and wait 91 days before he could use the bankruptcy exemption laws ofhis new State.
Under BAPCPA, the exemptions a person can use requires a determination of several factors:
- If you have been located in a State for730 days (two years)immediately before the filing date for your bankruptcy, then you use the laws of that State.
- Ifthere is no state that you have lived in for 730 days (meaning you have moved from one state to another) but you have lived in a State for a period of 180 days or longer, then you use the exemptions for that State.
- If neither the 730 day or 180 day rules apply, (which means you’re a Ramblin’ Man, tryin’ to make a livin’ and doin’ the best you can)then you are in theunique situationwhere no State’s exemption laws apply, in which case youwould have to use the Federal Exemptions.
Depending upon which state’s exemptions are better for the debtor, it may be best to file quickly to use the prior state’s bankruptcy exemption laws or wait out the 180 days and use the new state’s bankruptcy exemption laws.
Obviously, there will be other factors that should go into the decision of the timing of a bankruptcy other than whichexemptions to use.
Rarely do people move from one state to another in search of the best bankruptcy exemptions for their debt situation.
However, when there is a choice of exemptions, it is a good idea to consult with an experienced bankruptcy attorney to assist you in making the best decision for your debt situation.
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