The Bankruptcy Code, which is codified as title 11 of the United States Code, is the uniform federal law that governs all bankruptcy cases. Although it is a uniform code, each state is allowed to add their details through state statutes so that the bankruptcy process may be different from state to state.
Bankruptcy courts are divided up into 94 different districts located throughout the United States and its territories. Depending on the locale of each court determines what state or territorial statutes effects the bankruptcy process.
As an example, those people filing bankruptcy in Texas may have to abide by different bankruptcy laws than those who file in Oklahoma. Those people who file bankruptcy in Puerto Rico may have to abide by different laws than those who file in California.
A person who assumes that the process is no more than filing some boilerplate forms makes a huge mistake in their thinking. Filing for bankruptcy may be basically similar because of the uniform code, but in detail, it is just not the same throughout the country or its territories.
The main differences in filing bankruptcy from state to state or in territories are found in exemption laws that designate which property is off limits to creditors. In bankruptcy law, creditors cannot take exempt property from debtors regardless of how much money you owe them. The bankruptcy courts cannot take exempt property either. In addition, there are federal exemption laws a debtor may opt to use in lieu of state or territorial laws if they permit such option.
Another difference in bankruptcy process comes in the form of rules and procedures of the bankruptcy courts themselves. Each district is allowed to make its own rules and procedures in implementing federal bankruptcy laws. That means there is some latitude in the interpretation of the bankruptcy laws by bankruptcy court judges and their administrators. In effect, the bankruptcy process will not only be different from state to state or territory, it can be different from bankruptcy district to bankruptcy district.
Not only is there differences in the bankruptcy process because of state and territorial laws and rules and procedures of the district courts, but where you live can influence what type of bankruptcy you file. The means test you are required to pass before you can file a Chapter 7 bankruptcy, the simplest type of bankruptcy, is determined by being at or below the median income for a family your size in the area in which you live. Passing the means test can also be determined by the amount of disposable monthly income you have if you are above the median income in your area. Disposable monthly income may vary from district to district depending on how the bankruptcy court interprets your expenses.
The bankruptcy process can be complicated, and every single bankruptcy district can be unique in their interpretation of the Uniform Bankruptcy Code. That is why it is wise to consult with an experienced bankruptcy attorney before filing for bankruptcy protection. They should be familiar with the differences of bankruptcy law in your area.
- What Property in Virginia Can You Keep in Bankruptcy? (betterbankruptcy.com)
- Understanding Homestead Exemption in Bankruptcy (betterbankruptcy.com)
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