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 a misguided impression that filing bankruptcy means that you have to give up all of your property. Fortunately, this is not the case. When you file bankruptcy some protections allow you to keep your property so that you can maintain a basic standard of living. The bankruptcy court does not believe that you shouldn’t have a bed to sleep on, or a kitchen table to eat on. The bankruptcy court, however, does think that people should not be able to keep luxury assets such as high-end cars, jewelry, and other luxury property if they are going to use protections under the Bankruptcy Code. When you file for bankruptcy you will learn that there are federal bankruptcy exemptions and state exemptions. Depending on what kind of assets you have you will need to determine which set of exemptions are proper for your case.↑ Back to top
I filed with Upsolve. Read my story →
Does New York Allow The Use Of Federal Bankruptcy Exemptions?
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.↑ Back to top
New York Bankruptcy Exemptions:
Real Property Exemptions: New York Homestead Exemptions
When you file for bankruptcy and own a home you will need to use the homestead exemption to keep the home. The homestead exemption protects any equity in your home so that the Bankruptcy Court doesn’t take it. With the high cost of living in New York, it may seem like New York’s homestead exemption is low however, compared to other geographic areas it is very competitive. 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 $170,825.00 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 $85,400.00 of equity in your home.
Keep in mind that married couples can double these exemptions as long as they both are on the deed to the home.
Personal Property Exemptions:
Consumers filing bankruptcy can keep their personal property under §5205. Below, you will find the property that you can protect:
Household Goods and Furnishings:
Appliances: Stoves, heating equipment for use in your home and fuel for 120 days
Sewing/ photos: Sewing machine, religious texts, family photos and portraits
Books: school books; other books up to $575 in value;
Religious Items: seat or pew used for religious worship;
Animals: domestic animals
Food: food necessary for you and your family for 120 days up to $1,150;
Clothing and household furnishings:clothing, furniture, one refrigerator, radio, one television, one computer, one cell phone, kitchenware, prescribed health aids; wedding ring, watch, jewelry, art up to $1,150 in value.
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.
All property held in a spendthrift trust for a debtor if the trust was created by someone other than the debtor.
Uniforms & Military awards:
Uniforms, arms, and equipment used in military service and pensions and awards awarded for military service.
Deposits for rental real estate or utilities
Service animals; necessary medical and dental accessories
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
A plot no larger than 1/4 acre with no building or structure (other than headstone or monument) on it.
$600 on deposit with a savings and loan association.
Tools of the Trade:
Necessary tools for your trade (if you work or own a business) up to $3,400 in value.
New York Wildcard Exemption:
The wildcard exemption in New York (section 5205(a)(9)) allows you to keep property deemed necessary to meet a basic standard of living. The wildcard exemption can be used to protect any property except real property. New York only allows you to use this exemption if you did not use the homestead exemption. For example, if you have cash in your bank account but have a home with equity, you will not be able to use the wildcard to exempt cash in your bank account. However, if you don’t have a home with equity, you can use the wildcard exemption to exempt your cash in the bank. If you decide to use the wildcard to exempt cash, you will only be allowed to exempt up to $1,150.
You can also use the wildcard exemption to exempt your other personal property like a motor vehicle, jewelry and other items.
Motor Vehicle Exemption:
Just because you file bankruptcy does not mean that you will need to give up your mode of transportation. 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 have $11,375 of equity in the motor vehicle.
Other New York Exemptions:
Wages- § 5205: below, you will find income, such as wages and maintenance payments that the 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.
Retirement Accounts - § 5205, Debtor & Creditor § 282:
IRA, 401(k), Keogh, or another qualified retirement plan; Social Security, unemployment, disability, public assistance, workers’ compensation or veterans' benefits.
Bodily Injury- § 5205, Debtor & Creditor § 282
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.
Lawsuit Settlements- Debtor & Creditor § 282(3)(iii) & Debtor & Creditor § 282(3)(ii),(iv)
$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 otherwise, you won’t be able to use it. Take note, this does not 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.
Public Assistance - § 5205, Debtor & Creditor § 282:
Aid to blind, aged, disabled, crime victim's compensation, home relief, local public assistance, Social Security benefits, unemployment compensation, veterans' benefits, workers' compensation.↑ Back to top
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 the bankruptcy estate and can be sold to pay off your creditors. A bankruptcy attorney can give you legal advice and help you determine if the federal exemptions or the state exemptions should be used in your circumstances. A New York bankruptcy lawyer can also assess your specific situation to determine if bankruptcy is the right option for you. Keep in mind that many bankruptcy lawyers provide free consultations that you should take advantage of. If you think you have too much equity in your property don’t lose hope yet! You may be able to file a Chapter 13 bankruptcy to help you catch up on your bills.
If you don’t have any property you’re worried about losing or the financial ability to pay for a lawyer, then you can use Upsolve’s free web app to help you.↑ Back to top