Your residency comes into play in two ways.
First of all, you must have been a resident of the county for at least 91 days in order to file for bankruptcy in that county.
Secondly, you must be a resident of California for 2 years in order to use the California exemptions. If you moved to California less than 2 years ago then you have to use your prior state’s exemptions.
However many states do not allow people to use their exemptions unless the person is a resident of the state. If, less than 2 years ago, you moved from a state that only allows its residents to use its exemptions, then, it would seem that you aren’t permitted to use any exemptions. However, there is a provision in the bankruptcy law that allows you to use the Federal Exemptions if you are in such a situation.
The Federal Exemptions are similar to the California 703 exemptions. But they are not the same. The Federal wild card exemption is only $11,975 per person. California’s wild card exemption is a total of $23,250 regardless of whether a single person or a couple is filing. So for a married couple, the total Federal wild card exemption is around the same as California’s. But for a single person, the Federal wild card exemption is around 1/2 of California’s.
This actually occurs quite frequently.
Let’s take an example. My clients tell me that they moved to San Diego County from Tennessee around 1 year ago. They meet the 91-day residency requirement so they are permitted to file for bankruptcy in San Diego.
But, since they have lived in California for less than 2 years they must look to the Tennessee exemption laws. The Tennessee laws are very stingy with regard to how much property a debtor can keep in bankruptcy. People that declare bankruptcy in Tennessee can keep very little property. However, a close look at the Tennessee exemption laws shows that a debtor must be a resident of Tennessee in order to use the Tennessee exemption laws.
Therefore the client is not allowed to use the California exemption laws under the 2-year residency rule. And the client is not allowed to use the Tennessee exemption rules because he is not a resident of Tennessee anymore. In this case, he may use the Federal Exemptions.