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Which exemptions are available to a bankruptcy client who recently moved to Florida from another state? What if you are providing bankruptcy advice to a client who resides in Florida but is planning to move to another state? Do the Florida exemptions apply? What about the other state’s exemptions? Maybe it is the federal exemptions? In these situations, the determination of which exemptions apply can be complicated. This article discusses the statutory changes set forth in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) as well as the cases attempting to resolve the question of which exemptions apply.
As a result of BAPCPA, a debtor may only claim the state law exemptions available in the debtor’s state of residence if the debtor has lived in that state for 730 or more days as of the petition date. 11 U.S.C. §522(b)(3). However, the issue of which exemptions apply becomes more complicated when the debtor, within the 730 days before filing bankruptcy, moved from a state which requires the debtor to reside in that state in order to claim that state’s exemptions. Pursuant to an unnumbered paragraph following 11 U.S.C. §522(b)(3), if a debtor is ineligible to claim any state’s exemptions, the debtor may claim the federal exemptions. This precise issue has been addressed by various bankruptcy courts throughout the country. In each case, the court looked to the law of the state of the debtor’s residence to determine whether that state’s exemptions could apply to a non resident of that state.
In three published cases in which a debtor filed bankruptcy in Florida within 730 days after moving to Florida from another state, the court found that the claim of federal exemptions was appropriate. In In re Crandall, 349 B.R. 220 (Bankr. M.D. Fla. 2006), a Chapter 7 debtor was entitled to claim the federal exemptions where the debtor moved from New York to Florida within the 730 days preceding the filing of her bankruptcy petition, as the debtor was ineligible for the New York exemptions because she was not domiciled in New York on the petition date. In In re West, 352 B.R. 905 (Bankr. M.D. Fla. 2006), a Debtor who had moved from Indiana to Florida within 730 days prior to the petition date was not entitled to Indiana state law exemptions as they were only available to residents of that state. Accordingly, the court held that the debtor, by default, was entitled to federal bankruptcy exemptions. In In re Underwood, 342 B.R. 358 (Bankr. N.D.Fla. 2006), a debtor who moved from Colorado to Florida 23 months prior to filing her Chapter 7 petition was barred by §522(b)(3) from claiming the Florida exemptions. The court found that Colorado exemptions were not available to non Colorado residents, and therefore found that the debtor was entitled to claim federal exemptions.
In the situation where a debtor moved from Florida to another state, the bankruptcy courts have held that Florida exemptions are not available to non Florida residents and therefore the claim of federal exemptions was appropriate. In In re Adams, 375 B.R. 532 (Bankr. W.D. Mo. 2007), the court held that debtors who moved from Florida to Missouri could not claim Florida exemptions even though they lived in Florida the greater part of the 180-day period immediately preceding the 730-day period before filing as Florida's exemptions are not applicable to a homestead and property located outside of Florida. In In re Battle, 366 B.R.635 (Bankr. W.D. Tx. 2006) the court held that a debtor who moved from Florida to Texas was not a Florida resident on the bankruptcy filing date and therefore was not entitled to Florida exemptions, but was entitled to claim federal exemptions. It should be noted that the decisions cited herein were based upon specific language found in the relevant state’s exemption laws which precluded a non resident from utilizing that state’s exemption laws.
Florida bankruptcy practitioners should be aware of these exemption issues which arise when a potential bankruptcy debtor recently moved from another state or is planning on moving to another state.
