National Rifle Association Bankruptcy
The National Rifle Association, NRA, headquartered in and being sued by the State of New York, has filed for bankruptcy protection… in Texas.
The reasons for the bankruptcy filing, aside, you might wonder if this means you can file bankruptcy in some state other than where you live. Do you have the same options to file bankruptcy as the NRA? How does this work for consumers?
Where Can I File My Bankruptcy?
The NRA is headquartered in New York, but is filing bankruptcy in Texas. How can they do this? Can consumers “pick and choose” where they file?
Short answer for consumers is – NO. Consumers have to file, in most cases, where they have lived for the greater part of the 180 days before they file. This means, if you lived in one state and then moved to a different state, you will have to wait at least 90 days in order to qualify to file in the state you moved to. If you need to file before 90 days, you’ll have to file in the state you moved from.
Businesses which operate in different locations have different rules. The NRA, being a business, filed in Texas because they had sufficient business connections there, more than likely. But this is an option not available to most consumers.
NRA Filed Chapter 11 – What Kinds of Bankruptcy Can I File?
Some, mostly larger, businesses file bankruptcy under Chapter 11, which was created specifically for the more complex needs of business reorganization.
Due to the very high costs of filing Chapter 11, normally only larger businesses can afford it. However, a new kind of bankruptcy was created in February 2020 to permit smaller businesses to reorganize at a lower cost than Chapter 11. This is the new Subchapter V bankruptcy.
NRA Is Being Sued, How Does Bankruptcy Affect the Lawsuit?
Generally, filing bankruptcy will stop all collection actions, and most lawsuits. NRA filing bankruptcy will interrupt the New York lawsuit as well, according to an article in U.S. LEGAL NEWS (January 15, 20214:15 PM).
This is not unique to Chapter 11 bankruptcy. Consumers filing for bankruptcy get the same immediate protection from their creditors too. In fact, consumers often file bankruptcy to stop lawsuits before their creditors can get judgments against them and garnish wages, or foreclose on their homes.
When a bankruptcy is filed, whether it is Chapter 11, Chapter 7 or Chapter 13, the Automatic Stay goes into effect immediately, and stops lawsuits and collection actions.