When you file for bankruptcy state law determines what property is exempt, that is in a Chapter 7 what property you can keep. It is the state where you have had your domicile (your permanent home) for at least two years that counts. This could be a state that you do not have many connections with anymore, yet it still controls. To make it more complicated, most states prohibit you from using the exemptions in the Bankruptcy Code which are more generous than most states.
In most cases those restrictions only apply to residents of those states, but only an attorney can make a good prediction. Also some states’ exemption laws do not apply outside that state. If you are not restricted than you can claim the more generous Bankruptcy Code exemptions.
What this means, of course, is that your bankruptcy lawyer is expected to (1) recognize that another state’s exemption law applies; (2) understand whether the state or federal exemptions apply and to what degree and (3) understand how to apply the exemptions from another state. I practice in Atlanta, yet must become an “expert” in the exemptions from another state. I know that in Georgia there are some cases that interpret our exemptions and I suspect that this is the case elsewhere. This is yet another reason why consumer bankruptcy is no longer an area where one can dabble or learn on the job.
I agree with Jonathan’s remarks. I get a number of clients who tell me that other bankruptcy attorneys have told them they could not file or would not take the case. I do not see why. I look up the law on Lexis and give the clients my opinion as to whether they can use the Bankruptcy Code exemptions or if they are stuck with their old state of domicile. Apparently this is too much work for some of our colleagues!