Question about federal vs state...I think my lawyer is wrong.

[BKFLA]

I read a couple of old posts on here that has me wondering about our attorney's decision to place in federal exempt. We own a home in AZ that we're surrendering. We bought it in May of 2005 and then left the home while doing a short sale that fell through in August 2007. We moved to CA to live with family to try to catch up on credit cards and pay them down in hopes that our house was going to a short sale (it's up for auction on 3/12).

Well, living with family wasn't working so my husband took a job here in FL (which just laid him off and now we're both jobless - go figure) and we moved in December 07 to come here to FL. Our attorney has us as federal exempt, but from what I read, we may be considered AZ exemptions because of living there over 2 years. Does living in CA for over 91 days and then living here in FL (it will be over 91 days when we file in a few weeks) still make us federal exempt from what anyone on here knows? I appreciate anyone's input. Thanks!

[BKFLA]

I've googled the heck out of this, but still can't find anything indicating that we are definitely federal exempt - I'm finding a lot of grey areas. Our lawyer didn't get back to us last week about it, so anyone that knows about federal exemptions...you're opinion is greatly welcome.

[blackhole]

I believe that what your attorney is saying is that you should be using Arizona exemptions, but AZ must be a state that allows you to choose between the federal or state. I don't think CA or FL will have any bearing since you haven't lived there 2 years. Not sure if this helps at all...good luck!

[DebtorDan]

I believe your lawyer is right. We were in a similar situation in texas. We had moved here a year ago now, long enough to file here, but not long enough to use its exemptions. The state we moved from did not allow federal exemptions, but because texas did, we could use the federal exemptions even though we couldn't use the texas ones.

[danaf]

1. AZ is not a state that allows federal exemptions. If you don't believe me, look up the exemptions yourself. Try legalconsumer bankruptcy calculator and type in the zip codes and check out the exemptions tab. Or try going to Florida, California, and AZ's bankruptcy websites as there is information there.
2. And since you lived in AZ longer than CA or FL over the past 40 mos, you will need to use AZ's exemptions in your bk. The new law clearly defines this to deter people from being able to move to a more bk friendly state and using their exemptions. If debtordan got away with this in Texas - than lucky him. But being in Florida - I don't know that I would risk the error.

So your lawyer is dead wrong. Don't let him screw up your bk because he wants your money. Consult more attorneys. Be sure of what the laws & rules are.

[DebtorDan]

It surprised me that they were available to us, but i don't think we "got away with anything."

I believe that if the state you are filing in offers a choice between the state and federal exemptions, you can use the federal exemptions REGARDLESS of how long you've been living in the state. I know that's what legal.consumer.com says if you click on the right hand side where it says "what exemptions must I use" and read the window that pops up. that's the first place i just went to double check. i remember being quite surprised. in our case, it made things easier--though our old state's exemptions are actually more generous than the federal ones. I know I'd double checked back when our attorney told us that was what he ws going to use, and I recall that I'd found it elsewhere in either the state of federal statutes. But what do I know--I am not an attorney, and as I've posted elsewhere, I wonder sometimes how much of one my attorney is, too. Though he's been at it awhile, and from what I can see on Pacer, has done an ok job at it.

However, looking at the original posting again; if florida doesn't offer a choice of the federal exemptions, then the above wouldn't apply. have you asked your attorney for his reasoning behind the federal exmption use?

[danaf]

debtordan - you are correct. I just took at look at the federal code. I didn't realize there was that exception for States allowing federal exemptions.

that means had the op filed in California, they would have been able to use federal exemptions. But now, since they are in Florida, they must use AZ exemptions.

[FreshLikeADaisy]

BKFLA, just an fyi: the actual requirement of the law says that you use the exemptions of the state where you spent the majority of the six month period immediately prior to two years ago. In other words, if you filed today, March 4 2008, where did you live for the majority of the 180 days just prior to March 4, 2006? It's kinda screwy, but as Danaf pointed out, it was written to prevent bk shopping, especially for high dollar debtors.

Here's the way the Nolo book explains it (slighly paraphrased for length; I'm typing this out):

-- If you have made your domicile [primary residence] in your current state for at least two years, you can use that state's exemptions. [Edit: or federal, if your state allows that choice.]

-- If you have had your domicile in your current state for more than 91 days but less than two years, you must use the exemptions of the state where you were domiciled for the better part of the 180 day period immediately prior to the two-year period before filing.

-- If you have had your domicile in your current state for less than 91 days, you can either file in the state where you lived immediately before (as long as you lived there for at least 91 days) or wait until you have lived in your new home 91 days and file in your current state, using the exemptions as pointed out above.

-- If the state you are filing IN [not the state you left] offers a choice between state and federal exemptions, you can use federal exemptions regardless of how long you have been living in the state.

-- If these rules deprive you of the right to use ANY state's objections, you can use federal exemptions. Examples would be if you had been living overseas, or in a state that only allows *current* residents to use its exemptions (such as Florida).

There are other requirements for homestead exemptions that go above and beyond this, but those are the basics. Hope this helps!!!

P.S. I highly recommend the Nolo Press book for Chapter 7 even if you have an attorney; it explains the basics very well and was invaluable to me in learning the bk process. It was the best $30 I spent in the whole bk. You may want to consider getting one, especially if you're still in the planning stages of your bk.

[BKFLA]

Thank you all very much for your input. My lawyer did finally get back to me and swears that are federal exempt even though we were in AZ for just over two years. I'm really worried now that you all pointed this out. This is the second time I've brought it to his attention, but he says that because we moved to CA for over 91 days and then will be in FL for over 91 days that we qualify. To me, it doesn't make sense. It seems like we should be using AZ exemptions. So I don't know what will happen at the 341 as we have our home in foreclosure there so the trustee will see how long we were there for. Our lawyer does a ton of BK and is strictly BK so I guess he must know what he's doing.....

[BKFLA]

Oh Freshlikeadaisy, I completely missed that part of your post that explains how we can use the 91 days for federal exempt until I reread it.....I feel a WHOLE lot better now! Thank you for posting that and thanks again to the rest of you for your input, it's always greatly appreciated!

[FreshLikeADaisy]

No problem! I wish you well!

[danaf]

I stand corrected - thanks FLD for clarifying that and apologies for stating something so strongly that I obviously didn't have a grasp on.

[FreshLikeADaisy]

No worries, Danaf. That's why I love this forum: if you are off, someone usually steps right in, which makes it easier to post and share your thoughts, I think. And sometimes it even helps the discussion! I'm not at all sure I would have taken the trouble to look it up and type all that out if you hadn't raised a question in my mind! So you see, it's all good.