New York does allow consumers filing bankruptcy to use the federal bankruptcy exemptions. The Bankruptcy Code has implemented rules that require consumers to either choose either the federal or state exemptions meaning, they can’t use both at the same time. Moreover, you will need to have lived in New York for at least 730 days (two years) to be able to use the New York exemptions. Congress implemented this rule to stop people from gaming the system and moving to a different state just to be able to use more generous exemptions.
Written by Attorney Karra Kingston.
Updated June 9, 2022
What Are New York Bankruptcy Exemptions and Why Are They Important in Chapter 7 Bankruptcy?
Bankruptcy exemptions allow you to keep certain assets after you file for bankruptcy. When you file a Chapter 7 bankruptcy your goal is to get a fresh start. Many people are under the misguided impression that filing bankruptcy means that you have to give up all of your property. Fortunately, this isn’t the case. Exemptions are what allow you to keep your property so that you can maintain a basic standard of living.
Bankruptcy laws don’t allow filers to keep luxury items such as high-end cars and expensive jewelry, but most of the possession you use day to day can be protected by exemptions.
Does New York Allow Filers To Use Federal Bankruptcy Exemptions?
New York allows consumers filing bankruptcy to choose between using the federal bankruptcy exemptions or the state exemptions. You have to choose one or the other, though. You can use both. To use the New York state exemptions, you have to be a resident for at least two years before you file your case. Otherwise, you’ll probably be limited to using the federal exemptions.
This article can help you get an idea of which set of exemptions will be most beneficial to you. Compare the exemptions for property and assets you own to see which will best protect the things you own and care about.
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New York Bankruptcy Exemptions
Bankruptcy exemptions can be seen in three broad categories: real property (like your home), personal property (like household goods and your car), and intangible property (like pensions and insurance).
Real Property: The New York Homestead Exemption
When you file for bankruptcy and own a home you need to use the homestead exemption to keep your home. The homestead exemption protects the equity you have in your home up to a certain amount so the Bankruptcy Court doesn’t take it. Equity is equal to your home’s current market value minus what you have left to pay on your mortgage(s). Keep in mind that married couples can double these exemptions as long as they both are on the deed to the home.
New York’s homestead exemption varies based on where you live:
If you live in Queens, Kings, New York, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester, or Putnam County you can exempt up to $170,825 of equity in your home.
If you live in Dutchess, Albany, Columbia, Orange, Saratoga, or Ulster County you can exempt up to $142,350 of equity in your home.
If you live in any other county within the state other than the ones listed above you are allowed to protect up to $85,400 of equity in your home.
No matter where you live in New York, the state homestead exemption is much more generous than the $27,900 federal homestead exemption.
You can also protect a burial plot no larger than 1/4 acre with no building or structure (other than a headstone or monument) on it.
Personal Property Exemptions
Consumers filing bankruptcy can keep all personal property that’s covered by exemptions. Here are some common personal property exemptions in New York.
The following household goods and furnishing are fully exempt unless otherwise noted:
Appliances: stoves, heating equipment for use in your home, and fuel for 120 days
Family photos and portraits
Other books up to $575 in value
Seat or pew used for religious worship
Food necessary for you and your family for 120 days up to $1,150
Clothing and household furnishings, including clothing, furniture, one refrigerator, radio, one television, one computer, one cell phone, kitchenware, prescribed health aids, wedding ring, watch, jewelry, and art up to $1,150 in value
Necessary tools for your trade (if you work or own a business) up to $3,400 in value
Uniforms, arms, and equipment used in military service and pensions and awards awarded for military service
Service animals and necessary medical and dental accessories
Motor Vehicle Exemption
Filing bankruptcy doesn’t mean you have to give up your car. New York bankruptcy exemptions allow you to exempt the equity in one vehicle as long as it does not exceed $4,550. If the vehicle is equipped for a disabled person then you can protect $11,375 of equity in the motor vehicle.
The $1,150 wildcard exemption in New York allows you to keep property — except real property — that isn’t otherwise protected by exemptions. But you can only use this exemption if you didn’t use the homestead exemption.
For example, if you have a home with equity you want to protect using the homestead exemption, you can’t use the wildcard to exempt, say, cash in your bank account. But if you don’t have a home with equity, you can use the wildcard exemption to exempt your cash in the bank.
Money Benefits & Other New York Exemptions
Security Deposits for rental real estate or utilities
College Tuition: New York State college choice tuition savings program trust fund payments for the benefit of a minor or up to $11,375 of value if you own the account
Banking: $600 on deposit with a savings and loan association
All property held in a spendthrift trust for a debtor if the trust was created by someone other than the debtor
Retirement Accounts & Public Assistance: IRA, 401(k), Keogh, or another qualified retirement plan
Damages Owed to You for Damaged Property: Property or damages arising from the loss or damage to exempt personal property, for up to one year after collection of proceeds.
Wages: New York law allows you to protect:
90% of income received within 60 days before filing bankruptcy.
90% of earnings from the sale of milk on your farm.
100% of pay to a noncommissioned officer, private, or musician in the armed forces of the U.S. or N.Y.
Court-ordered alimony, maintenance or child support to the extent reasonably needed for support.
Aid to blind, aged, disabled
Crime victim's compensation
Local public assistance
Social Security benefits
$8,550 in damages compensating you for a personal injury. This exemption is only allowed if the award specifically states that the money is being given for compensation for bodily injury. This doesn’t allow you to protect any money that you receive for pain and suffering.
You can exempt lost future earnings that compensate you or someone upon whom you depend for support up to an amount reasonably necessary to support you and your dependents.
Benefits from crime victim’s reparations laws, payment for the wrongful death of your dependent or a person upon whom you were dependent and up to $8,550 for personal bodily injury.
Comparing the Federal Exemptions
As previously mentioned, you’ll have to compare New York’s exemptions with the federal exemptions to decide which set you want to use to protect your property. Here’s a list of the most commonly used federal exemptions for your reference:
Homestead exemption: $27,900
Motor vehicle exemption: $4,450
Household goods: $700 per item up to a total of $14,875
IRAs up to $1,513,350
Life insurance: $14,875
Tools of trade: $2,800
Personal injury awards: $27,900
Wildcard: $1,475 plus an additional $13,950 if you don’t use the homestead exemption
Filing Chapter 7 Bankruptcy
Knowing which New York bankruptcy exemptions to use when filing a Chapter 7 bankruptcy is essential to ensure that your property is safe. Any unexempt property is property of thebankruptcy estate and can be sold to pay off your creditors. It’s normal to feel overwhelmed about deciding between the two. If you’re feeling stressed, consider consulting with a bankruptcy attorney. An experienced attorney can give you legal advice and help you determine which set of exemptions to use in your case.
If you already know which exemptions will work best for you and you plan Chapter 7, you may qualify to use Upsolve’s free filing tool to file your case for free.