How will bankruptcy affect the proceeds from the sale of my home, especially if I move out of state?

UPDATED: Aug 24, 2012

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How will bankruptcy affect the proceeds from the sale of my home, especially if I move out of state?

I have been advised to wait until late next month to file for bankruptcy. Meanwhile I am in the process of selling my home. My annual income is under $15,000. I have been in California for 20 years, but after selling my house, I plan to move to Oregon. If I file for bankruptcy as a resident of 1 state but then moved to another before the bankruptcy is finalized, will the proceeds from the sale of my home be protected via my former state’s law or will I be forced to use my new state’s laws? And will I be more at risk to lose my funds after the sale or do home proceeds still stay protected?

Asked on August 24, 2012 under Bankruptcy Law, California


Mark J. Markus / Mark J. Markus, Law Offices of

Answered 10 years ago | Contributor

Exemptions are "protections" for value you have in certain assets such that they are "exempt" from collections.  Every state has different exemptions amounts available. Exemption laws are based on the state where you resided for the 2 years prior to filing your bankruptcy case or, if you lived in more than 1 state during that period, in the state where you resided for the greater part of the 180 days prior to that 2 year period.  Thus, based on your facts, California's exemption laws will apply if you file your bankruptcy case anywhere in the next couple of years, regardless of how if, when, or how many times you move.

How this will all affect the proceeds of sale of your home depends on numerous factors, none of which you have provided the facts for, such as which bankruptcy chapter you are filing, the amount you expect to receive in proceeds on your home, when you file bankruptcy in relation to the sale of your home, and the value of other assets you have which may need to be protected.   If you wish to use a homestead exemption to protect the proceeds, you will need to reinvest the proceeds from the sale in a new homestead within 6 months of the date of sale.

Mark J. Markus, Attorney at Law
Certified Bankruptcy Law Specialist--State Bar of California Board of Legal Specialization
Handling exclusively bankruptcy law cases in California since 1991.
bankruptcy blog:
Follow Me on Twitter:  @bklawr

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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