In today’s mobile society, it’s not uncommon for families to move frequently – even across state lines. These situations add another layer of complexity for those considering bankruptcy. The states where you last resided – and how long you’ve lived in each – can affect which bankruptcy exemptions you’re entitled to claim.

Exemptions allow you to shield certain property from creditors. As we discussed in a prior post, bankruptcy exemptions in Wisconsin cover several key types of property, including your homestead, motor vehicles, personal property, retirement benefits and certain other types of benefits.

So how long do you have to live in Wisconsin to claim those exemptions?

The federal bankruptcy code sets the parameters. Put simply, your ability to claim exemptions under state law depends on whether you physically live in that state and intend to live there indefinitely. This is a case-by-case determination based on more than just your statements of intent. The bankruptcy court may also look at factors such as your home ownership, employment, mailing address, voting registration, motor vehicle registration, tax returns and membership in local organizations.

It also matters how long you have lived there. If you moved to Wisconsin within two years before filing bankruptcy, you may not be able to claim Wisconsin exemptions. You may instead be limited to federal exemptions or those of the state where you previously resided. The law in this regard is designed to prevent debtors from moving between states simply to take advantage of more favorable bankruptcy exemptions.

As you can see, the law in this area – as in all aspects of bankruptcy – is extremely complicated. A qualified bankruptcy attorney can address the unique factors of your situation.

Source: WestLaw, Bankruptcy Exemption Manual § 4:6, “Which jurisdiction’s exemptions apply?” (2012).