To be considered domiciled in Minnesota, the person must not only be currently living here but must also have the intent to continue living in State indefinitely. Spending a year at your grandmother’s house in Minneapolis for a year to “find yourself,” while planning on leaving to return to California afterwards, does not count.
A person who has recently moved to Minnesota from another State can only file their bankruptcy case if they have lived here at least 91 out of the past 180 days (the majority of the past 6 months). However, while a person may meet this requirement, if that person lived in any other State, at any point, during the 2 year period before the date of filing, their ability to protect their property may be affected.
Bankruptcy exemptions are laws that protect a person’s property from creditors. Generally, debtors are allowed to choose either the specific exemptions provided for in the Bankruptcy Code to protect their property, or alternatively, to use any other available State or Federal law exemption. If the debtor lived in any other State in the 2 year period before filing for bankruptcy, it must be determined where they lived for the longest period of time in the 6 month period immediately prior to those two years.
If the State in which the debtor lived the longest during that 6 month time period was not Minnesota, the debtor would not be able to use Minnesota State exemptions, and would have to use either that State’s exemptions (along with any other applicable non-bankruptcy Federal exemptions) or the Federal Bankruptcy Code Exemptions. Choosing and understanding which exemptions are available to the debtor is very important, as it directly impacts the amount of property they will be able to protect in a bankruptcy.
Another important consideration for a person who has recently moved to Minnesota is their ability to exempt, and protect, their home in bankruptcy. The Federal Bankruptcy Code protects up to $25,150 in equity (value of the home minus the mortgage and other secured loans against the property) and Minnesota State Law protects up to $450,000 in equity. These are known as the homestead exemptions and only apply to the debtor’s principal place of residence (not 2nd homes or cabins). However a special provision of the Bankruptcy Code is designed to deter those who recently move from one State to another State, such as Minnesota, solely for the purpose of exploiting that State’s more generous homestead exemption in bankruptcy.
Under this provision, a debtor may only claim a homestead exemption up to $170,350, in equity, for homes purchased in Minnesota within 1,215 days of filing bankruptcy. Since this provision is designed to discourage out-of-staters from moving to Minnesota to take advantage of its large homestead exemption protection, it does not apply to homes that are acquired within the 1,215 day period from the transfer of another home in Minnesota used as the debtor’s primary residence.
A person would be very wise to consult with an experienced bankruptcy attorney before filing for bankruptcy, particularly when they have lived outside of Minnesota in the recent past, to ensure that they are eligible for filing their bankruptcy case in this State, and to make sure they are able to protect as much property as they can under the law. See us at LifeBackLaw.com!