Where Does Mobile Debtor File Bankruptcy?

It is often said that we live in a mobile society. Under the new bankruptcy law, mobility sometimes creates a puzzle when a debtor has to decide where to file bankruptcy and what state’s exemptions apply. Consider the example posed by a caller who last week told me he wanted to file Chapter 7 bankruptcy. The prospective debtor rented an apartment in Florida for over two years. Then, he resided in his brother’s apartment in Nevada, but he kept his lease for the Florida apartment. The Nevada lease was in his brother’s name. He helped pay his brother’s expenses. Last month, he moved to Colorado where he rented another apartment. He stated he intends to stay in Colorado and look for permanent work. The Florida lease is still current. He has a Nevada drivers license. He did not file tax returns for 05 or 06, but the last time he did file a tax return in 04 he listed Florida as his residence. Where does he file bankruptcy, and what state’s laws determine his exemptions.

Exempt property in Chapter 7 bankruptcy is based on the exemption laws of the state where you last resided for a period of two years. In this instance, Florida is the last state where the prospective debtor resided for two years. A bankruptcy petition must be filed in the state where you currently reside. Your residence is in the state that you consider to be your permanent home. At this point, I think this person intends to permanently reside in Colorado even though he does not have a job in Colorado and does not own property in Colorado. He expressed no intent to return to either Florida or Nevada as his permanent residence. I believe this debtor files bankruptcy in Colorado under Florida exemption law.

posted by Jonathan Alper, bankruptcy and asset protection lawyer, Orlando, Florida