Are you struggling with debt but plan to move to another state? Whether you're looking for a fresh start, a better job, or to be closer to friends and family, the move to a new state can be helpful during this difficult time. But anyone considering bankruptcy at the same time should learn how bankruptcy can be affected by their move. Here are answers to a few common questions.
Should You Just Walk Away?
Walking away from debt — moving away — has its appeal, especially when one is already moving to a different, faraway location. But doing so will cause even further, prolonged harm to your credit. Creditors and agencies have plenty of resources to locate missing debtors again, and by then your financial obligations will likely be even worse.
So don't let your move dissuade you from property dealing with your debt through bankruptcy. You still need the protection only it can offer.
Can You File in a New State?
Because it's a federal program, the state in which you file bankruptcy doesn't alter the basics of its protection. So you can file in your new state and still receive automatic stays from collections efforts, use exemptions to protect assets, and receive a discharge on qualifying debts no matter where they were taken out. However, you may need to meet residency requirements in your new state.
Which Exemptions Can You Use?
If you file bankruptcy shortly after moving to a new state, you should learn about their residency and exemption requirements.
Generally, can use the exemptions of whichever state in which you have been domiciled for two years. If you cannot qualify in your new state based on that period, you can generally use the federal exemptions instead.
Should You Compare State Rules?
If possible, research bankruptcy rules in both states before you decide in which state to file. Because the exemptions, time frames, and certain residency rules can be different for each state, you may find it clearly more advantageous to file in one or the other. The good news is that simple Chapter 7 bankruptcy can be completed in a few months, making this an option even as you prepare for a move.
Where Should You Start?
Begin by learning more about bankruptcy in the state in which you currently live. An experienced bankruptcy attorney can also help you compare both states and assist you in deciding on the right timing. Make an appointment today to get started creating the best possible financial future.
