Moving Out Of State And Filing Bankruptcy

Ever since the financial meltdown in 2008, the rest of the economy has continued to slide down the slippery slope. Over the last few years real estate has continued to drop in value sending many Americans into foreclosure. When real estate goes into the tank, the rest of the economy follows. It's been almost 3 years now since unemployment has dropped below 9%. Let's face it, the economy just plain old stinks. With all this bad economic news, many Americans are facing a bankruptcy filing. Some of these individuals tried to hang on as long as possible hoping that a job is just around the corner and they'll be able to dig themselves out of their financial hole. Since this crisis began many people lost their home to foreclosure forcing the lucky ones that still have a job to rent an apartment and the unlucky ones have ended up crashing on their parents couch. It's been a tough few years for many people nationwide. Some people have become so broke that filing bankruptcy has become an impossibility because they can't even afford to hire a bankruptcy attorney or even pay the filing fees.

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With all the moving going on, it's created a problem for many Americans searching for work and needing to file for bankruptcy. The problem starts if the individual has to cross state lines. The bankruptcy code requires an individual filing for bankruptcy to reside in the state they are filing for two years. But since that's not fair for an individual that has to move for employment or other reasons the bankruptcy code has a provision for the filer to live in the state they are filing bankruptcy the greatest part of 180 days if it's less than two years residency. Now it's starting to sound confusing, doesn't it?

The reason the Bankruptcy Code doesn't allow people to move and file bankruptcy is basically because of the exemption laws. Different states have more generous exemptions available to residents for different situations. If the debtor can file in any state they wanted to, they could take a look at their current situation and see which state offers the most protection and then file bankruptcy in that state. As a rule of thumb, if the debtor is a resident of the state they are filing bankruptcy, they will have to use the bankruptcy exemption laws from the state they left. If all else fails, the individual filing for bankruptcy always can use the federal bankruptcy exemption laws.

With all this confusion it's pretty obvious that a person faced with moving and filing bankruptcy should not try to go it alone. A bankruptcy attorney will be able to research the individual's personal situation and adapt it to file bankruptcy in the district that they now reside. The bankruptcy court does not want to take away the debtor's rights by not allowing them to file bankruptcy and giving them the fresh start that bankruptcy promises. That's why they're just a few more hoops to jump through, but it's definitely doable. In today's economy with a large number of foreclosures and unemployment, many folks are facing this exact problem and this now is becoming a common occurrence for a bankruptcy attorney. It's more important to take care of family issues and if a person needs to move, they should move and worry about filing bankruptcy when they settle down at a new location.

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