If you live in Wisconsin, can you file your bankruptcy case in Iowa? Maybe.
The subject of this post is venue. “Venue” is the court in which a case is filed. In most criminal cases, the proper venue is the county in which the crime was committed. If you are charged with theft from a store in Lancaster, your case should be filed in the Grant County Circuit Court. In a civil case, the proper venue is the county in which important events took place or the county in which the defendant lives or conducts his business.
The proper venue for a bankruptcy case is laid out in 28 U.S.C. § 1408. A bankruptcy case may be filed either in the district in which the (1) domicile, (2) residence, (3) principal place of business, or (4) principal assets of the debtor have been located for the 180 days immediately preceding the filing, OR in the district in which the debtor’s domicile, residence, business, or assets were located for a longer portion of that 180-day period than in any other district.
“Domicile” is the place you consider your permanent home. “Residence” is the place you are currently living. The distinction usually comes up with students, military personnel, or people who move for business.
Short version: You may file your bankruptcy case in the judicial district where any of those four things were located for the last 180 days. If your domicile, residence, business, or assets were in more than one district during those 180 days, the proper venue is the district where they were located for the most time.
Venue may be proper in multiple districts. Example: Debtor lives in the Western District of Wisconsin and owns a business with headquarters in the Northern District of Iowa. Either district would be a proper venue. The debtor who has his home in Minnesota, lives in the Northern District of Iowa while attending school, owns a business with headquarters in the Northern District of Illinois, and still has the majority of his assets at his parents house in the Eastern District of Wisconsin could theoretically file his bankruptcy case in any of those four Bankruptcy Courts.
But can an Illinois debtor who has never lived in Wisconsin, never owned a business in Wisconsin, and doesn’t own anything located in Wisconsin file his bankruptcy case in Wisconsin? Yes and no. She could file in Wisconsin, but Wisconsin would be an improper district under 28 U.S.C. § 1408. And Rule 1014 of the Federal Rules of Bankruptcy Procedure tells us that cases filed in an improper district may be dismissed or transferred to the proper venue. If the judge doesn’t mind and if no “party in interest” objects, our Illinois debtor may sail through with no problem.
If your bankruptcy attorney recommends you file in an improper venue, question his motivations. Is it because the attorney isn’t licensed in the proper venue and he doesn’t want to lose you as a paying client? Is it just more convenient for him? Is he willing to foot the bill if your case is dismissed or transferred to the proper venue? Protect your interests from unethical people by being an informed client. Insist your attorney file your case in the proper venue.
Image credit: flickr/w.marsh