Can I File for Bankruptcy After Moving to Texas From Another State?

 Posted on September 26, 2022 in Bankruptcy Procedure

People can encounter issues related to debt in a variety of situations, and when debts become overwhelming, or when financial problems affect their ability to repay what is owed, bankruptcy may be the best option. Filing for bankruptcy can be a confusing and overwhelming process, and different bankruptcy laws may apply in each state. For those who recently moved to Texas from another state, it is important to understand how this will affect their ability to file for bankruptcy and receive relief from their debts.

The 180-Day Rule and the 730-Day Rule

The venue where a person may file for bankruptcy will depend on where they have lived during the previous six months. A person must file for bankruptcy in the state where they lived for the majority of the 180 days before the date they file. That is, if a person recently moved to Texas, they may file for bankruptcy in Texas as long as they have lived in the state for at least 91 days during the six months before they file. Otherwise, they will be required to file for bankruptcy in the state where they previously lived.

The length of residency in a state will also affect the bankruptcy exemptions that will apply during a person's case. These exemptions will play a role in a Chapter 7 bankruptcy, and they will determine what assets may be exempt from liquidation. For example, Texas provides an unlimited homestead exemption that ensures that the equity a person owns in their home will not be subject to liquidation in a Chapter 7 case.

A rule known as the 730-day rule determines whether the Texas bankruptcy exemptions may be used in a Chapter 7 case. This rule states that a person can only use the bankruptcy exemptions in their current state of residence if they have lived continuously in that state for at least 730 days (two years). Those who do not meet this requirement must use the bankruptcy exemptions in the state where they lived during the majority of the 180 days prior to the 730 days before they filed for bankruptcy.

Those who do not qualify to use the Texas bankruptcy exemptions may use the federal bankruptcy exemptions. However, these exemptions may be lower than would be allowed under state laws. For example, the federal homestead exemption is currently $27,900 (or $55,800 for a married couple). To make the most out of the exemptions available in Texas, it may be necessary to delay bankruptcy until a person can meet the applicable residency requirements.

Contact Our San Antonio Bankruptcy Exemptions Lawyer

At the Law Offices of Chance M. McGhee, we can provide you with an understanding of the laws and requirements related to bankruptcy, and we can help you determine whether you qualify to file for bankruptcy in Texas. We will review your assets and debts to help you maximize the exemptions available under state or federal law. To schedule a free consultation with a Boerne bankruptcy attorney, call our office at 210-342-3400.

Sources:

https://www.law.cornell.edu/uscode/text/11/522

https://statutes.capitol.texas.gov/Docs/PR/htm/PR.41.htm

https://www.law.cornell.edu/uscode/text/11/522