Most New York bankruptcy debtors own all their assets in New York State, though it’s probably more common for them than others to own assets in nearby jurisdictions. (How frequently do people open bank accounts in New York but then move to New Jersey?) Even more commonly, many older debtors own property in New York and Florida, and others own vacation homes in Pennsylvania. The question they may ask, then, is what happens to all these assets that are located in different states if they file New York bankruptcy?
The answer is: the same thing that would happen if they were located in New York, which can have good or bad consequences for debtors.
To begin with, the issue here is what effect New York bankruptcy exemptions have on property outside of the state. The rule is that debtors get only one set of exemptions for all their property wherever it’s located. Assets in New Jersey or Florida are still subject to the same set of New York exemptions in a New York bankruptcy case. Moreover, debtors can only apply the exemptions once. So owning a second car in another state is not going to double a debtor’s exemptions for automobiles.
The question then shifts to what debtors can do if another state’s exemptions are more favorable to New York’s or the federal government’s. For example, some states offer significantly more generous homestead exemptions than even New York. Here. The term here is venue in bankruptcy. Venue means the appropriateness of the court to hear the case, not whether the court is competent to do so regarding the parties to the case (personal jurisdiction) or the case’s legal issues (subject-matter jurisdiction).
The venue for a bankruptcy case is any district containing the debtor’s domicile, residence, principal place of business, or principal assets for the 180 days preceding the filing. Because nearly all bankruptcy cases are initiated by debtors, venue is usually not issue worthy of dispute, especially because in a personal bankruptcy the debtor must appear at the section 341 meeting of the creditors, and it’s unlikely that a debtor would file bankruptcy in a district that would make this meeting inconvenient to attend.
However, sometimes debtors have multiple options for choosing a venue, and the creditors might object to one or another. This is one more reason to choose the best venue before proceeding to avoid needless litigation.
(Click to read more about “venue” and New York bankruptcy.)
Debtors who own property in multiple jurisdictions are probably best off filing where they live, but it’s possible that exemptions in a different state will give them an advantage. If you own assets in multiple states and you’re experiencing serious financial difficulties, then talking to an experienced New York bankruptcy lawyer is crucial to deciding where it’s best to file.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced bankruptcy attorney Brooklyn NY Bruce Weiner for a free initial consultation.
