Bankruptcy Exemptions in New York State

When filing bankruptcy, clients’ first questions often involve whether or not they can keep things they own, like their home, their car, or their 401(k).

These questions are important, and the answer to the question is two-fold:

  1. Is there a lien against the property?
  2. If no lien exists, what Bankruptcy Exemptions are available?

If there is a lien against the property, which is equal to or more than the value of the property, as long as you remain current on the payments for that house or car, you will be able to keep the property.

If there is no lien, or the lien is less than the value of the property, you have some equity in the property. When you have equity in property, your attorney must review the exemptions available to you and determine if there is an exemption available that will protect that asset.

Individual states have the right to use the Federal Bankruptcy Exemptions or to set their own. In New York State, debtors in Bankruptcy are entitled to choose between the Federal Exemptions and the New York State Exemptions. There are rules regarding debtors who have not resided in New York for all of the last two years and the exemptions they are required to use. So, if you have moved to New York recently, discuss with your attorney what exemptions will be available to you.

Below is a list of the common exemptions available under New York State law:

  • In Western New York, $75,000 in equity in the home, condo, or mobile home that you live in; a married couple will be entitled to a $150,000 exemption. (In counties outside Western New York, these limits are even higher.)
  • If you do not own a home, or if you have no equity in your home and do not need the homestead exemption, you may exempt $5,000 in cash or deposits in the bank; $10,000 for a couple.
  • $4,000 in equity in a vehicle.
  • 100% of valid 401(k), 403(b), IRA accounts, and other ERISA qualified retirement savings accounts.
  • Up to $10,000 in household goods, valuing those household goods with a craigslist or yard-sale value.
  • 100% of funds on deposit in a valid college tuition savings program trust fund for a child.
  • A wedding ring, no matter the value (though not an engagement ring).
  • Jewelry, artwork, or antiques up to $1,350.
  • Tools necessary for your trade or business, up to $3,000.
  • Pension, social security, or worker’s compensation benefits.
  • Child support and alimony payments, to the extent necessary for the support of the debtor and his/her children.
  • Up to $7,500 in a recovery of a personal injury action.
  • Domestic animals and 60 days of food up to a value of $1,000.

Under the Federal Exemptions, a debtor would be able to protect:

  • Up to $21,625 in equity per debtor, in the home, condo or mobile home that you live in; this amount doubles to $43,250 for married couples who own the property jointly.
  • $3,425 in equity in a vehicle.
  • Valid 401(k), 403(b), IRA accounts, and other ERISA qualified retirement savings accounts up to $1,095,000 per debtor.
  • Household goods, valued at up to $550 per item, with a maximum total value of $11,525, again based upon a craigslist or yard-sale value.
  • Jewelry up to $1,450.
  • Tools necessary for your trade or business, up to $2,175.
  • Pension, social security, or worker’s compensation benefits.
  • Child support and alimony payments, to the extent necessary for the support of the debtor and his/her children.
  • Up to $21,625 except for pain and suffering or for pecuniary loss in a recovery of a personal injury action.
  • So-called “wildcard” exemption, which allows a debtor to protect up to $1,150 of any property AND any unused portion of homestead up to $10,825 per debtor.

Additional exemptions do exist, so, if you have an interest in any other types of property that you are concerned about, be sure to discuss those assets with a qualified attorney.

Bankruptcy exists to provide debtors with an opportunity to obtain a fresh start. Thanks to the Bankruptcy Exemptions, that fresh start should include your home, your car, your favorite arm chair, and even—or especially—Fido the dog.

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