Most bankruptcy judges will let you claim the federal bankruptcy code exemptions to keep your property in Chapter 7, even if you moved to Texas less than two years ago from a state that does not allow you to use these exemptions.  The reason for this rule is that most of the states that have opted out from the relatively generous federal bankruptcy exemptions have limited their opt-out law to its own residents.  A concern however is that a growing minority of judges are ruling that regardless of explicit residency restrictions the old state’s exemption laws apply.   This means that if you move from another state to Texas less than two years before filing that state’s law applies and if you lived in more than one state during these two years then it is the state where you lived the majority or greater part during the 180 days before the two years that applies.   This may sound complicated, but I do this analysis all the time as many of my clients have recently moved from out of state.

Attached is an opinion from Judge Marvin Isgur that is an example of this troubling trend.  The solution is to get a bankruptcy attorney who does not mind anaylizing your rights under another state’s law in case you end up with a judge who takes this position.  I have found though that most of the time there is little resistance to claiming the federal bankruptcy exemptions, but in cases where there is a lot of property caution should be exercised in case you end up with a judge that takes this position.

Opinion holding that prior state’s laws apply