Old and new consumer bankruptcy lawyers have a treasure in John Bates’ masterpiece on the exemption laws of each state and the availability of those laws to non residents in bankruptcy.
Why do I care what the exemptions are in any state but California? The Bankruptcy Code! ( what other answer did you expect from me? )
BAPCPA tried to eliminate any advantage a debtor might reap by moving to a state with more generous bankruptcy exemptions than their current state. So part of your initial interview with a client is to determine whether they’ve lived out of state in the past 2.5 years.
Bankruptcy Code 522(b)(3)(A) sets out the formula to determine which state’s laws are available to the debtor who has not lived in the state where the bankruptcy case is filed for two years.
But it gets more complicated. The exemption laws of some states don’t apply beyond their borders. For example, California’s homestead is extra-territorial. It can be applied to an out-of-state residence by a debtor who has to use the California exemptions.
But which states allow extra-territorial application of their exemptions, and how do I find out, you ask.
Go to exemptionexpress, a membership benefit of NACBA. (you should belong to NACBA, regardless.)
The stated purpose of the site is to help bankruptcy lawyers
1. To determine what exemptions (federal, state, or both) are available to that debtor;
2. To determine what, if any, territorial limitations there may be on use of those exemptions; and
3. To provide statutory and case law in support of those determinations.
Talk about a public service. Thanks, John Bates.
What to do when there’s more cash than exemption.
Image courtesy of Marxchivist
Malcolm Ruthven says
You’re so right about that being a great site. My very first bankruptcy client was a recent import into California. Luckily for me, I had been pointed to http://www.exemptionexpress.com before the client showed up and it made short work of the exemption issue.