Moving anywhere is a big ordeal and a lot of hassle, even if it’s just down the street from your old home. Moving to a new state, however, requires even more work due to the logistics of the physical move plus all the paperwork you need to update. Not only does moving to a new state require changes in licenses, registration, addresses on all legal documents, bank accounts, PO boxes, and much more, it can also affect more unusual circumstances, such as bankruptcy filings.
If you are considering filing for bankruptcy in Marshall, MN and Minnesota is a new state for you, Behm Law Group, Ltd. can help you build a strong case for Chapter 7 or Chapter 13 bankruptcy and receive long-term debt relief.
A move to a new state affects bankruptcy so much because each state has its own specifications for bankruptcy exemptions.
What are bankruptcy exemptions?
Exemptions are allotted amounts provided under the laws of each state that allow you to protect your property from being surrendered in bankruptcy and sold by the trustee administering your case. The United States Bankruptcy Code has its own exemptions, too. Some states allow you to use either a particular state’s exemption allowances or the exemptions provided by the bankruptcy code, depending on which set of exemptions best works with your particular circumstances. Some states, however, require you to use only a particular state’s exemption allowances and those states prohibit you from using the exemptions provided by the bankruptcy code. The exemption amounts and the property items that can be protected with the exemptions vary from state to state but most large items, like your home or car, will be protected from liquidation. However, what you can protect with your bankruptcy exemptions might be affected by a move to another state.
In Minnesota, you can exempt your homestead with a value of up to either $420,000, if it is located in a city and is non-agricultural in nature, or $1,050,000, if it is rural and agricultural in nature, and you can exempt the value in your car up to $4,800. In Minnesota, you can also use the federal bankruptcy exemptions in place of the Minnesota exemptions. As indicated above, this is true for many states, though not all. States that currently allow you to use the federal exemptions include Alaska, Arkansas, Connecticut, Hawaii, Kentucky, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Washington, and Wisconsin.
How do I know what state I file under?
You will be required to file under the state you are currently the resident of. In order to establish residency for purposes of filing a bankruptcy case in a particular state, you must actually reside in that state for at least ninety-one (91) days of the preceding one hundred eighty (180) days before the date your case is filed. For example, if you resided in Wisconsin for all of 2019 and then moved to Minnesota on January 1, 2020 and you wanted to file for bankruptcy in Minnesota you would not be able to do so because you would have resided in Wisconsin for the majority of the one hundred eighty (180) day period preceding January 1, 2020. Rather, you would have to wait until April 1, 2020 in order to file bankruptcy in Minnesota because by that time you would have resided in Minnesota for at least ninety-one (91) days of the preceding one hundred eighty (180) day period.
Generally, in order to use a particular state’s bankruptcy exemptions one must reside in that state for two years (730 days). If one hasn’t lived in a state that long, one would have to use the exemptions of the state that one lived in for the two (2) years before moving to one’s current state. For example, if you lived in Alaska for four years, then moved to Minnesota a year ago, you would have to use the exemptions provided under the laws of Alaska. However, because Alaska allows people to use the federal bankruptcy exemptions, you could opt to use those exemptions instead of the Alaska bankruptcy exemptions. Even if one may have resided in a particular state for two (2) years before relocating to a different state, they may not be able to use the original state’s exemption laws. Indeed, some states prohibit non-residents from using their exemption laws. South Dakota is a good example of this. If you had lived in South Dakota for all of 2018 and all of 2019 and then moved to Minnesota on January 1, 2020, you would not be able to file for bankruptcy relief in Minnesota until April 1, 2020, as indicated above. When you would file your bankruptcy case on April 1, 2020, you would not be able to use the exemption laws of either the South Dakota or Minnesota because you would no longer be a resident of South Dakota and you would not have resided in Minnesota for the preceding two (2) years (730 days). In this case, however, you would be able to use the federal bankruptcy exemptions.
If you’re considering filing for bankruptcy in Marshall, MN and want to learn more about your exemption options, contact Behm Law Group, Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com today.
