Be careful about bankruptcy exemptions if you’ve just moved to Oakland from anywhere outside California. As I’ve explained in another post, you are allowed to protect and keep certain property. In California, the California legislature has decided on two lists that you can choose from. These lists apply whether you’re filing in Oakland, San Francisco, San Jose, Sacramento or anywhere else in the State of California. For most people who file for bankruptcy in California one or the other of these lists will allow them to protect pretty much everything that they own.
If you’ve moved from out of state in the past few years, however, you need to be careful. Under the current bankruptcy laws, we have to look at where you’ve been living for the past two to three years in order to determine if you’re entitled to use California’s exemption laws or if you have to use the laws of some other state.
Basically, the rules that determine which state’s exemptions you get to use are as follows:
1. The 730-Day Rule: Have you resided uninterrupted in the same state for the past 730 days? By the way, that’s two years (365 x 2 = 730). If the answer is yes, you use that state’s exemptions. If the answer is no, you go to the next rule, the 730 + 180-Day Rule.
2. The 730 + 180-Day Rule: Where did you reside for the greatest number of days in the 180 days preceding the 730 days prior to filing your case? How’s that for confusing? What it really means is that you look at where you lived the most between 2 and 2.5 years ago. Wherever that is, you get to use the exemptions of that state.
3. If it turns out that neither 1. nor 2. applies to your situation (i.e., you were living outside the country), you’re supposed to use the federal exemptions instead of the exemptions of a particular state. At this point, you definitely should talk to a lawyer who has a lot of bankruptcy experience so you can make sure you protect the maximum amount of property you can.
Does all of this really matter? Absolutely! The exemption lists vary a lot from state to state. California has one of the more debtor-friendly lists out there. You definitely wouldn’t want to file in California only to discover that you were not entitled to all the exemptions that would normally be available to a California resident. Again, this is why you should speak with an experienced bankruptcy lawyer.