I Just Moved: Can I File for Bankruptcy?

Filing for bankruptcy is a monumental decision, one that offers numerous benefits for your future and financial outlook. It also carries consequences in the short term, so you must assess every factor that might affect your case. A recent move to a new state is definitely a life event that impacts your decision-making about bankruptcy in Indiana. The issue boils down to exemptions under the US Bankruptcy Code and how they are affected by timing. You might not expect a few days to matter, but there is an ideal time to file to protect as much of your assets as possible.

Regardless of whether your situation warrants prompt action or waiting, the time is now to make the decision. You cannot delay in developing a solid legal strategy even before you move to a new state. It is important to work with an Indiana bankruptcy attorney to ensure you leverage all benefits of timing. Some background information is also helpful.

Comparing Exemptions

Though the reasons are different for the two forms of consumer bankruptcy, your goal is to safeguard as much of your property as possible. With Chapter 7, you could lose assets through liquidation; in Chapter 13, you pay the value of non-exempt assets.

You can protect property through bankruptcy exemptions, which are available through federal and state regulations. Therefore, the key question is whether you want to apply the exemptions of your new state or the state where you used to live. A second issue is any potential benefits to claiming federal bankruptcy exemptions.

Eligibility for New and Old State Exemptions

For purposes of bankruptcy exemptions, the duration of your “domicile” is important, i.e., how long you had a permanent residence in each state.

• 730-Day Rule: You must live in a state for at least two years, exactly 730 days, before filing for bankruptcy in your new domicile. If the exemptions in your new residence offer better advantages, you should wait.
• 180-Day Rule: The applicable period for this rule is where you lived for most of the 180 days, measured before the two years before filing for bankruptcy. This rule could work to your advantage if you want to apply for bankruptcy exemptions in your old state. 

Special Considerations for Homestead Exemptions

There are additional requirements you must meet if you want to leverage your new state’s beneficial homestead exemption. Besides the domicile criteria, you must own your permanent residence in that state for at least 40 months before filing for bankruptcy. Failure to file at the right time means the federal homestead exemption applies, which may be higher or lower than the applicable state.

An Indiana Bankruptcy Lawyer Can Advise You on Specifics

You can file bankruptcy after moving to a new state, but timing is important for getting the most out of the process. To learn more about when to file and other strategies, please contact Whitten & Whitten. You can call 219-756-0555 or visit us online to set up a consultation at our location in Merrillville, IN.