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Is Filing for Bankruptcy Different from State to State?

Wirtten By

Jason Provinzano

If you’ve just recently moved and are thinking of filing for bankruptcy, you may be wondering if filing is different from state to state. For the most part, the answer is no. But there are some things to note if you live in certain parts of the country.

Below, you’ll find some important information that should help you figure out where you stand, based on what state you currently call home. If you need more in-depth advice about your specific situation, schedule a free consultation with a JPP Law bankruptcy attorney in Scranton, PA, today.


States With the Highest Bankruptcy Rates

In 2012, bankruptcy rates were at an all-time high in the upper millions among US cities. The rate slowly declined and leveled for a while until 2019 when bankruptcy cases saw a sudden decrease. 

These are the top states for bankruptcy (as of May 2021):

  • Georgia – 8804 cases
  • Alabama – 6286 cases
  • Tennessee – 6684 cases
  • Nevada – 3226 cases
  • Kentucky – 4046 cases
  • Illinois – 9618 cases
  • Arkansas – 2269 cases

Collectively, the American Southern is currently home to the most bankruptcy files among other all regions of the US. What causes this? An Experian credit report points to poverty and insufficient government resources as the chief reasons.


Why Does Filing in a New State Matter?

Each state has exemptions laws, and depending on where you reside, you may not be able to protect all of your property. 

Anyone seeking the best advice for Chapter 7 bankruptcy should know that Chapter 7 exemptions protect your property from being seized by creditors. If you’re thinking about filing for Chapter 13 bankruptcy, however, know that the exemptions are designed to help debtors put together a payment plan to pay off any unprotected property. There are other forms of bankruptcy with their own exemptions as well, but these two are the most popular. 


Which State Exemption Can I Use?

It all depends on how long you’ve resided in your current location. To use your state’s exemptions, you’ll need to have lived there the majority of the time for the past two years. 

The reason you must have stayed there for two years is that the state exemptions vary greatly, and someone could easily cheat the system by traveling to a state with the most generous exemptions and file for bankruptcy there. 

If you’ve moved several times in the past two years, the courts will likely honor the residence you’ve stayed in the majority of the time. 

States With Unlimited Exemptions for Residents

  • California
  • Louisiana
  • Maine
  • Missouri
  • Nevada
  • Utah
  • West Virginia 


In What State Should You File for Bankruptcy? 

If filing is different from state to state, where should you file for bankruptcy? Since bankruptcy operates on a federal level, state laws have little say in the proceedings. That said, there are several things to consider when filing for bankruptcy in a new state. 

It may be harder to locate all of the resources needed to put together your case in an unfamiliar state, but it is doable with a bit of research. You’ll need to locate the courthouse, the local bankruptcy filing forms, and an appropriate credit counselor. 

In most cases, you should just file in the state you currently reside. 


Why Should You Hire a Bankruptcy Lawyer in Scranton, PA?

The process of filing for bankruptcy is complicated and often time-sensitive. That’s why you should always consult a professional when dealing with a bankruptcy case.

The experienced Scranton bankruptcy attorneys at JPP Law can help you protect your assets and secure your property. Speak to one of our representatives today to learn more about what JPP Law can do for you.

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