California Exemptions for Non Residents

[Kosemele]

I moved to Texas 7 months ago so do not qualify for tx exemptions. My understanding is that I qualify for CA exemptions, but not federal due to CA laws.

Assuming that is correct, can I, as a non-resident, file using either system 1 or system 2 exemptions under the California exemptions? Or am I restricted to one or the other?

[leonel9]

For sure you can use System 1 exemptions. If your jurisdiction finds bankruptcy-only exemptions to be illegal, then you will not be able to use System 2 exemptions. Consult with a TX a few bankruptcy attorneys, and pose this specific question if you want to use the System 2 list. You may not get the answer immediately, but for sure your attorney should be able to research and make a determination.

Sorry that didn't directly answer the question, but it's unlikely you'll find it here unless someone is knowledgeable on Texas law.

[mwr]

California does not have a residency requirement for using their bankruptcy exemptions. You could use either set which I prefer to call by their code section number, 703 or 704.

[leonel9]

The question here, I think, is whether or not Texas allows the use of exemptions lists that are only applicable to bankruptcy. Some states do not allow this, and in those states System 2 would be disallowed.

[mwr]

The question here, I think, is whether or not Texas allows the use of exemptions lists that are only applicable to bankruptcy. Some states do not allow this, and in those states System 2 would be disallowed.

If California is the state whose exemptions law is applicable on the date of the filing, then California exemptions laws apply. California exemptions laws have no residency requirement for use of California's exemptions (both sets). Texas exemptions law has nothing to do with it.

[leonel9]

The argument that the California exemption list should not be allowed for a non-CA filer using the CA exemptions list was made in the following case:

http://www.orb.uscourts.gov/sites/orb/files/documents/opinions/08-63391-fra7.pdf

I don't know enough to say whether this is an isolated incident or a valid concern that non-CA residents should research. I can say that it's not the only reference to this specific concern. Nolo suggests that "certain courts" find the California System 2 list unconstitutional:

http://www.nolo.com/legal-encyclopedia/california-bankruptcy-exemptions-property-assets.html

California’s System 2 exemptions only apply in bankruptcy (they can’t be used to protect your property against creditors outside of bankruptcy). Certain courts have deemed bankruptcy-only exemption systems to be unconstitutional while others allow debtors to use them.

This means that some courts (especially if you are filing for bankruptcy outside of California but are still using California exemptions because of domicile rules) may not allow you to use the System 2 exemptions. As a result, consider talking to a knowledgeable bankruptcy attorney to determine which exemptions are permitted in your area.

[mwr]

The argument that the California exemption list should not be allowed for a non-CA filer using the CA exemptions list was made in the following case:

http://www.orb.uscourts.gov/sites/orb/files/documents/opinions/08-63391-fra7.pdf

I don't know enough to say whether this is an isolated incident or a valid concern that non-CA residents should research. I can say that it's not the only reference to this specific concern. Nolo suggests that "certain courts" find the California System 2 list unconstitutional:

The argument was made and rejected in that case. Same in the subsequent BAP appeal. It's possible there are jurisdictions that hold otherwise, but I've never heard of that.