Do Bankruptcy Laws Vary from State to State?

The answer to this question is yes and no. Typical lawyer answer, right? Let me explain.

Let’s start with the premise that bankruptcy law is Federal law and therefore applies to residents in all 50 states. So, if we stopped the inquiry here, the answer would be “no” because all states use the bankruptcy code, in theory. Now for the tricky part: States are given the option of whether they want to use all of the federal law or just a portion of it. In other words, they can opt out from a very important section of the bankruptcy code. Many states have chosen to opt out. So, the answer to the question above is both yes and no.

Let’s take Florida for instance. Florida uses Federal Bankruptcy law and Florida State law in a normal bankruptcy case. As always, there are exclusions that don’t quite fit this mold, which is why it is important to seek the opinion of an experienced bankruptcy attorney. Florida combines Federal and State law when determining what assets will be protected. Other states may do the same or they may use Federal law exclusively, or they may use both. So, again, the answer to the question asked above is yes and no.

This is important for a consumer to understand because when they search generic questions about bankruptcy law on the internet, like “how does bankruptcy work” or “what is bankruptcy,” the search engine might find relevant information to the question, but that information could be from another state. Faulty search results could be very detrimental to an individual’s understanding of how the bankruptcy laws operate in their situation. I’ve seen this mistake be made in my practice many times.

Don’t get me wrong, I enjoy when people have done the research before coming in for a complimentary strategy session for Estate Planning, Bankruptcy and Personal Injury with one of our bankruptcy attorneys. It’s always better to have fully engaged clients who are fully vested in their cases. I usually ask them where they received their information from. If it was from our website, I have absolutely no problem with the information that was given. However, if it comes from an alternative source, I have to sit them down and explain exactly why their logic may be faulty or why that information doesn’t pertain to our state. It’s not their fault, how are they supposed to know that the blog they were reading doesn’t apply the way they thought it would? I’m just glad that they took the time to do the research and put in the effort to try and understand what they were facing. If you are or a loved one are facing financial difficulties, we invite you to schedule a complimentary strategy session for Estate Planning, Bankruptcy and Personal Injury with all our bankruptcy attorneys. Also, our website is full of information relevant to Florida residents who are considering filing for bankruptcy. If you have a specific question about bankruptcy that you do not see answered on our website, please feel free to email or call us at (800) 391-4337, so we can answer your questions.