Bankruptcy provides financial relief to both individuals and business owners struggling with overwhelming debt. It starts when you file the required paperwork, called a petition, with the bankruptcy court. The proper place to file your bankruptcy petition is in the federal bankruptcy court. You'll choose the court located where you live, maintain your principal place of business, or keep your primary assets during the majority of the 180 days before filing.
Learn about the differences between Chapter 7 and 13.
It is important to file your papers in the right court. As a rule of thumb, you typically file your bankruptcy petition in the place you lived or operated a business for the majority of the past 180 days. You’ll choose one of these three places while taking into account the 180-day rule:
When most of your debts are from running your business, it makes sense to file where your business is located. For example, if you own a yogurt store in Provo, Utah and your primary creditors are the frozen yogurt mix supplier, the paper cup distributor, and local radio station, your creditors might claim that your home state of Nevada is an inconvenient location.
Find out why someone with primarily business debts doesn’t need to take the means test.
When you don’t have any assets, and most of your debts are consumer debts, it is a good idea to file where you live. Consumer debts are personal obligations for things you used for yourself or family, including items and services such as:
If the majority of your debts are a consumer in nature, it makes sense to file close to home. It will be difficult for the bankruptcy trustee appointed to administer your case or creditor to justify moving the location of your bankruptcy elsewhere
Learn about debts discharged in Chapter 7.
When your creditors stand to get money from your bankruptcy, your case is an “asset” case. Since liquidating, or selling your assets is the job of the trustee, a creditor or trustee might question whether the assets can be sold efficiently from far away. Learn more about asset and no asset bankruptcy cases.
If you've moved one or more times shortly before filing, you’ll file wherever you were the majority of the time during the 180 days. For instance, if you lived in Texas for ten years, but moved to Arizona two months ago, Texas will be the proper place to file. Keep in mind that you might have to use Texas exemptions to protect your property, however.
Find out more about how moving affects your bankruptcy exemptions.
Once you decide where file, you’ll need to find the right court. You don’t file in the state court where you go for most legal needs, such as divorce filings or paying traffic tickets. You must locate the federal bankruptcy court that covers your geographical area.
Start by going to the Federal Court Finder page on the United States Court’s website. You can search by location or court type. Once found, it’s a good idea to verify that the court located closest to you is the right one. You can call the court clerk or visit the particular court’s website.
The bankruptcy clerk will accept your petition regardless of where you file. If you get it wrong, however, the bankruptcy trustee or a creditor could file a motion asking the judge to either move or dismiss your case. If no one objects, your bankruptcy petition will move forward.