Our last blog post introduced the rules about when newer Texas residents can use this state’s property exemptions. Exemptions protect your assets when you file bankruptcy. Today we expand on this.
The Timing Rule
In general, you can only use the exemption protections available to Texas residents once you have lived here for 730 days—two years. (See our last blog post on “How Long Must You Live in Texas to File Bankruptcy Here?”)
The applicable federal statute—Section 522(b)(3)(A) of the Bankruptcy Code—says that you must use the exemption laws “applicable on the date of filing of the [bankruptcy] petition at the place where the debtor’s domicile has been located for the 730 days immediately preceding the date of filing of the petition.”
So usually your domicile must be located in Texas for two years before you can use the exemptions available to Texas residents. That doesn’t mean that you can’t file bankruptcy when you move to this state. You can without any delay. It’s just that you can’t usually use the property exemptions available to most Texans in your bankruptcy case.
Where is Your “Domicile”?
The statute doesn’t focus on “where you lived” for the prior 730 days, but rather where your “domicile has been located” during that period. What exactly is your domicile?
The term is not defined in the Bankruptcy Code, but it generally means where you are living, with the intent of that place being your home. So you may be able to live in another state temporarily without the intent to stay there, with the clear intention to return to the state you came from for that state to continue to be your domicile.
So if you are a long-term Texas resident who temporarily moved out of state during the last two years, were gone for a limited period of time, always intended to return to Texas, and have now moved back here, there is a good chance that your domicile was in Texas throughout that time.
It helps to have some evidence of your intent to return to Texas, such as keeping your Texas driver’s license. It also helps if your purpose for being elsewhere was temporary—to get a temporary job or to take care of dying parent, for example.
If you did keep your Texas domicile, you can use the Texas exemptions even though you weren’t physically here during the last 730 days.
Important Twist to the Timing Rule
But what if Texas used to be your domicile—the place you called home—but you moved out of state without a clear intent to return? But now you are back here, with Texas being your home again, but being here less than two years since you’ve returned. Depending on your timing, you may still qualify for the Texas exemptions. Here’s how it works.
If you have been moving around and did not live in one single state during those prior 730 days, then you use the property exemptions available to residents of the state in which you were the resident during the 180 days BEFORE the 730-day period prior to filing bankruptcy. In other words, you look to where you were living—or more accurately, where you were domiciled—during the 6 months before two years ago.
If your head’s not already spinning, a final twist is that if your domicile changed during that 180-day period before the last 730 days, you look to the state where your domicile was located “for a longer portion of such 180-day period than in any other place.” So if your domicile was in Texas during at least 91 days during that prior 180-day period, you get to use the exemption laws that apply to Texas residents when you file bankruptcy now.
Let me help you untwist these laws so that you know whether or not you can use the Texas property exemptions, and how to proceed one way or the other. My name is Carrie Weir and I’m a Texas bankruptcy attorney serving the Dallas-Fort Worth Metroplex, especially the area around Rockwall, Heath, Greenville, Lavon, Wylie, Mesquite, and Rowlett. Let me help you consider and, if appropriate, file bankruptcy here in Texas. Please get in touch with me for a free and confidential consultation. Please call 972-772-3083 or use the contact form here. Thank you.
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