There are two ways in which moving to a new home might affect a bankruptcy case, and they both relate to the exemptions that are available in Chapter 7 and that govern the liquidation analysis that a Chapter 13 plan must satisfy.

Unlike prior law, BAPCPA allows a debtor to use the bankruptcy exemption scheme of the state where the debtor has been domiciled for the 730 days (roughly 2 years) immediately preceding the petition date. Someone who moved from another state within the preceding 730 days must use the exemptions provided by the state in which the debtor was domiciled for a greater part of the 180 days preceding the 730 days than in any other state. Some states allow a bankruptcy debtor to elect the state’s own exemption scheme or a uniform scheme provided in the Bankruptcy Code itself, but many states do not. To further complicate matters, some state exemption schemes do not apply to non-residents. If the result of looking back 730 days and the greater part of the 180 days preceding the 730 days is that a debtor would be entitled to no exemptions, BAPCPA allows the debtor to use the Bankruptcy Code exemptions.

BAPCPA does not spell out what happens when some of the relevant state’s exemptions (such as those for personal property) apply but others (such as a homestead exemption) do not. Only judicial decisions or legislative amendments can clarify this matter.

The second way in which moving affects a bankruptcy case relates to homestead exemptions. Some states have homestead exemptions that exceed $125,000. BAPCPA eliminates the excess over $125,000 for any interest acquired within the 1215 days (roughly 40 months) preceding the petition date. There is an exception when the debtor owned a home in the same state longer ago than 1215 days and rolled the proceeds of selling that home over into a new home within the 1215 days. According to the plain meaning of BAPCPA, someone who moves more than once within the same state would have their homestead limited to $125,000. At least one bankruptcy judge has rejected this argument; in that judge’s view, a debtor is allowed to rollover the proceeds of more than one sale without losing the benefit of the state’s homestead exemption.