People move between the Dakotas, Minnesota, Iowa, Nebraska, Wyoming, and Montana all the time for work, family, or a fresh start. If you’ve moved in the last couple of years and are thinking about bankruptcy, there’s an important question to answer first: which state’s exemptions protect your property?
The answer comes from a federal rule known as the 730-day rule.
Where You File vs. Which Exemptions You Use
These are two separate questions.
- Where you file is generally the federal district where you’ve lived for the greater part of the last 180 days. If you live in South Dakota now and have for most of the past six months, you’d usually file in the District of South Dakota.
- Which exemptions you use depends on where you’ve lived for the past two years. That’s the 730-day rule.
How the 730-Day Rule Works
- Lived in one state for the full 730 days (two years) before filing? You use that state’s exemptions.
- Moved within the last two years? You look back to the 180 days before that two-year window, and generally use the exemptions of the state where you lived for most of that period.
- Can’t use either state’s exemptions? In some situations, such as when the old state limits its exemptions to current residents, you may be able to use the federal exemption list instead.
An Example
Say you moved from Fargo to Sioux Falls 14 months ago. You haven’t lived in South Dakota for the full two years, so you look back further. If you lived in North Dakota for most of the 180 days before that two-year window, North Dakota’s exemptions would generally apply, even though you’d file your case in South Dakota.
This matters because the two states protect property differently. South Dakota’s homestead exemption, for example, has no dollar cap on value, while other states cap home equity at a set amount. The difference can determine whether you keep your home, your vehicle, or your savings.
A Special Rule for Homes Bought Recently
Federal law also limits the homestead exemption for people who bought their home within roughly the past three and a half years (1,215 days), in some situations, unless the equity was rolled over from a previous home in the same state. If you bought your South Dakota home recently, this cap could apply even though South Dakota’s own homestead exemption is unlimited.
Should You Wait to File?
Sometimes waiting until you’ve passed the two-year mark in your new state means better protection. Sometimes waiting makes things worse, especially if you’re facing a garnishment, lawsuit, or foreclosure. The right timing depends on your property, your debts, and the pressure you’re under right now.
Get Help From a Firm That Knows Both Dakotas
Because Severin Law Firm serves both North and South Dakota, we regularly help people who’ve moved between states. Attorney Tom Severin is licensed in South Dakota and admitted to the U.S. Bankruptcy Court for the District of South Dakota. We’ll figure out which exemptions apply to you and whether now is the right time to file, all through a virtual consultation. Call 701-433-1411 or request a free consultation.
Related: Chapter 7 Bankruptcy in South Dakota · North Dakota Chapter 7 Bankruptcy · South Dakota Bankruptcy Exemptions
Disclaimer: This article is general information, not legal advice. Residency and exemption rules are fact-specific, so speak with an attorney about your situation. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
