Bankruptcy Filings by
State

A guide to the differences in filing for bankruptcy
from state to state.

Bankruptcy Filings by State

Bankruptcy filings by State don't change much, mostly because
bankruptcy is, by and large, a federal matter.  Bankruptcy
courts are all under the federal jurisdiction, making it impossible
for you to file for bankruptcy in a state court. This is usually
because ones creditors are based out of multiple states, making it a
difficult process for them if they have to have bankruptcy lawyers
who are qualified to practice in every state in the union.

There are some differences from state to state, and those
differences lie almost entirely in exemptions.  Before we can
get into those, however, we need to have a solid understanding of
what the different types of bankruptcies that can be filed
are.  We're assuming that, because you're at this site, you are
not a business and that you are an individual, meaning you are going
to want to file for personal bankruptcy.  This excludes chapter
11 bankruptcy.  The two types of bankruptcy filings available
to individuals are Chapters 7 and 13.

Chapter 7

Chapter 7 bankruptcy is the form that liquidates all of your
non-exempt assets and then distributes them among your
creditors.  Chapter 7 is basically where the court appoints a
trustee and they come in and look at your estate, and figure out
which of your assets they are legally allowed to liquidate.
They then take these assets, liquidate them, and distribute the
proceeds among your creditors.  After that, you are free of
almost all of the different forms of debt you would normally be
required under law to pay.  This form of bankruptcy generally
results in greater losses to both you and the creditor, who only
gets some of their original money back, so it is not favorable.

Chapter 13

In chapter 13, it is still possible for a creditor to make a
little bit more money back, and you don't have to worry about your
entire estate being liquidated.  In Chapter 13, a
reorganization of debt takes place that basically takes all of your
debt and restructures it in a way where you can continue to pay off
your debts to your creditors.  This bankruptcy takes a little
bit longer than chapter 7 does, but it doesn't end in you losing
everything you own and, if your home was in danger of being
foreclosed upon, it gives you a home for a little bit longer, as you
can't follow through on a foreclosure while a chapter 13 bankruptcy
is pending.  Generally, this is a less painful way of going
through bankruptcy for the creditors, as they will likely get more
money out of it, and it's structured in a way more conducive to
recovery than the chapter 7, cut-your-losses method.

Exemptions and Differences in Bankruptcy Filings by State

The biggest differences from state to state are in what is exempt
in chapter 7 bankruptcy.  In general, they make certain things
untouchable, so after the liquidation, you aren't left with
nothing.  Some states favor the creditor in these terms -
meaning they have less exemptions so that the creditor gets back
more than the debtor - and others favor the debtors, meaning they
provide more potential exemptions that you won't have to sacrifice
on the altar of you bankruptcy.  These exemptions vary greatly
from state to state, so it's impossible to identify any consistency,
more or less.

Chapter 13 doesn't change as much from state to state, except in
exactly which loans you are discharged of at the end.  The
appeal of chapter 13 to most debtors is that in Chapter 13 you get a
few more loans discharged than you would under chapter 7.
There are some variations from state to state, but for the most
part, the differences are negligible.

In general, by state there isn't a lot of variation from case to
case.  The execution of the order of the court is the only
thing that the states have control over, the rest of it is a federal
matter.

Add Your Comments about
Bankruptcy Filings by State: