Bankruptcy: State Property Exemptions
What property do I get to keep when I file bankruptcy?
All 50 states have enacted legislation that regulates what property is protected from seizure when a debtor files bankruptcy. Some states require residents to use only their state exemptions, while other states allow residents to use either the federal property exemptions or the state exemptions, whichever are more favorable to the debtor.
To prevent bankruptcy filers from moving to a state with more favorable bankruptcy property exemptions immediately before filing bankruptcy, Congress enacted a law requiring bankruptcy filers to be a resident of a state for at least two years before using that state's bankruptcy exemptions. If you haven't lived in a state for at least two years, you must use the exemptions of the state you moved away from (but only if you can't use the federal exemptions.) Note that this rule applies only to those who are using state exemptions. If your state allows you to use either federal or state exemptions (Alaska, Arkansas, Connecticut, District of Columbia, Hawaii, Kentucky, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Pennsylvania, Rhode Island, Texas, Vermont, Washington, and Wisconsin) you can always use the federal exemptions regardless of how long you have lived in a state. In otherwords, if you live in a state not listed in the sentence above, you must have resided in that state for at least two years prior to filing bankruptcy to use that state's property exemptions.
To find out what the current state bankruptcy exemptions are in your state, google the name of your state plus bankruptcy exemptions to get a list of them.
Also, if you use your state's property exemptions, you are entitled to use the federal nonbankruptcy exemptions too. For those who reside in the states listed above, you have the option of picking which set of exemptions are most favorable to you -- either the federal bankruptcy exemptions or the state exemptions combined with the federal bankruptcy nonexemptions. You should pick the option that lets you keep the most property.