Bankruptcy Lawyer Bryan W. Stone answers the question: “How do I file for bankruptcy?”
Once you have committed yourself to filing for bankruptcy in order to take control of your debt, it is one of the first questions you must next face: Where should I file? The question becomes necessarily more complex when a company is looking at filing for Chapter 11 bankruptcy; it is inherently more difficult to determine a particular state of residence for corporations and other business models that have assets and conduct business in multiple states. However, where to file for bankruptcy, known in the legal world as “venue,” is also a common conundrum for individual consumers looking to file for Chapter 7 or Chapter 13 bankruptcy.
For example, what if you have residence in more than one state? Some people split their time roughly equally between homes in two different states. Others have a home base in one state but travel constantly for work and spend more time in hotels than at “home.” Still others no longer live in the United States but have assets in our banks and want to know if they can file for bankruptcy here. For each of these individuals, it is important to speak to an experienced bankruptcy attorney to ensure that you are filing for bankruptcy in the proper venue. Otherwise, creditors can move to have it rescheduled to a venue more convenient to them, causing considerable extra time and expense for the filer, or to have the case dismissed altogether.
There are 94 different federal judicial districts in which a person can file for bankruptcy, usually in a separate bankruptcy court. Federal statute U.S.C. 1408(1) lays out venue requirements for a bankruptcy case. They are:
- Domicile: This is legally defined as the place where you have a primary, fixed and permanent home, with an intent to return. Domicile can be different from the state where the individual is actually living. For example, many members and family of the military, corporate officers, professional athletes, artists and other individuals might spend a significant amount of time working or “playing” in a state, county, region etc. than the one in which they reside. While a person can have more than one residence, legally speaking only one place will be considered domicile.
- Residence: For purposes of venue and jurisdiction, this is simply the place where one lives. It does not require an intent to return like domicile.
- Principal place of business: Where a person works, or, in the case of a business, generally where the business’s books and records are kept and is often where the main office, upper management, or head of the firm are located. For corporations, it is usually the state in which the company filed its articles of incorporation.
In order to have venue in a particular district, a debtor must satisfy one of the above bullet points for the 180 days prior to filing OR one of the bullet points that existed in that district for a longer period than any other district during the 180-day period. The language of the federal venue law means that during a period of transition, a debtor can have multiple venue options for a period of time.
In Chapter 11 cases, venue can also exist in districts where the company has another bankruptcy case pending. Venue considerations for foreign and multi-national companies are covered by a different set of statutes but also include the interests of justice and the convenience of the parties.
If you are contemplating bankruptcy in the Charlotte area, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with legally sound advice for your particular situation.
About the Author
Kyle Frost joined Arnold & Smith, PLLC in 2013 where he focuses his practice on all aspects of civil litigation and bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.
Born and raised in upstate New York, Mr. Frost attended the University at Albany on a Presidential Scholarship, graduating magna cum laude with a double major in Political Science and Sociology. He went on to attended Wake Forest University School of Law in Winston Salem, North Carolina.
Following college, Mr. Frost spent over a year teaching English in South Korea. He worked in a private school in Seoul developing curriculum, English programs, and educating both children and adults that were interested in learning a new language.
In his spare time, Mr. Frost enjoys homebrewing, fishing, and travelling.
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