New York Bankruptcy Exemption
New York is one of the states that allows you to choose between the state exemption list and the federal bankruptcy exemptions. In most cases, the New York exemptions allow for more protection than federal exemptions.
However, it is important that anyone filing for bankruptcy also understands the federal wildcard exemption. This exemption allows you to protect any property you would like to retain after bankruptcy.
Filing for bankruptcy can become quite complex. It is critical to work with an experienced New York bankruptcy lawyer who can help you navigate the process and give you the best chance of a positive outcome.
Contact Michael H. Schwartz, P.C. now to get the bankruptcy help you need. We are ready to put more than 40 years of experience to work for you. Our record includes not a single denied discharge. Call or contact us online now for a free consultation.
What Are Common New York Bankruptcy Exemptions?
Even though you file Chapter 7 bankruptcy, most if not all of your property is exempt from being sold or taken from you.
Individuals can choose certain exemptions that protect their property from being liquidated as part of the bankruptcy process. There are federal exemptions, and some states, such as New York, also have their own exemptions. In New York, the most common exemptions include:
- Homestead exemption – Homeowners who have equity in their home, co-op, condo, or mobile home can exclude up to $170,825.00 per person if you live in Westchester, Rockland, Putnam, or any of the 5 boroughs in New York City. The amount is slightly less for Orange and Dutchess Counties ($142,350.00).
- Car – You can protect up to $4,550.00 in the equity of a motor vehicle. If the debtor has a disability, the amount of this exemption increases to $11,375.00.
- Personal property – There are many different types of personal property individuals can include in this exemption. Some of the most common include clothing, TV, radio, and furniture. All assets included in this exemption have different values for the amount that can be protected.
- Wages – 90 percent of any wages that were earned but within 60 days of filing for bankruptcy are exempt during the bankruptcy process. Some individuals can protect 100 percent of their wages.
- Benefits from public assistance – This exemption includes unemployment benefits, veterans’ benefits, and Social Security benefits.
- Awards from divorce – This exemption is for alimony (maintenance) and child support. Although 100 percent of child support is protected because that is money used to care for the child, alimony is only exempt if the recipient is dependent on those funds and would otherwise be left in financial hardship.
Most of these exemptions have limits, meaning that you cannot protect 100 percent of an asset’s value when claiming it as an exemption. It is important to speak to a bankruptcy lawyer who can fully explain what exemptions are available, and how much you can protect within that exemption.
What Property Can You Not Protect with a Bankruptcy Exemption?
In some cases, debtors can keep all of their assets when filing for Chapter 7 bankruptcy, but that is not always true. Some items that are not automatically protected during bankruptcy include:
- Musical instruments that have a high value, unless the person filing is a professional musician
- Collections of valuable items, such as coins and stamps
- Valuable family heirlooms
- Stocks, bonds, other investments, and cash that exceeds the exempt amount and are Not in retirement accounts.
- Multiple vehicles
- Second homes, including cottages and vacation homes
Although the bankruptcy courts recognize that a person should not lose everything as a result of the bankruptcy, items that are considered a higher value are generally not exempt during the process.
Does New York State Allow for Federal Exemptions?
Not all states have their own list of bankruptcy exemptions, but New York is one that does. Debtors filing for bankruptcy can choose between the federal exemptions found at 11 U.S. Code, Section 522, or from the state’s exemptions. However, debtors must pick only one system and they cannot choose some exemptions from one list and other exemptions from another list.
Who Can Claim Bankruptcy Exemptions?
Anyone filing for bankruptcy can claim the applicable exemptions. However, when spouses file jointly bankruptcy, each spouse can claim the total amount allowed within the exemption, essentially doubling the amount of the exemption. Each spouse, though, must have an interest in the property that is considered exempt.
The official bankruptcy forms you will fill out when filing for bankruptcy will include sections where you can include your exemptions. You may also be eligible to qualify for other exemptions that are not as common, although you may have to meet qualification requirements. This is often where the bankruptcy process can become more complex and where working with a bankruptcy lawyer is very beneficial.
Do Bankruptcy Exemptions Change?
Due to the fact that bankruptcy exemptions typically include certain amounts that debtors are allowed to protect, those amounts must change periodically. This is the only way to accurately reflect how much is reasonable for a person to protect as part of an exemption.
In New York, the exemptions must change every three years in order to provide realistic amounts that a debtor can include in their exemption. New York law follows this three-year guideline, as the exemption amounts were changed in 2015, then in 2018.
Our New York Bankruptcy Lawyer Can Help
Bankruptcy is often considered a last resort, but it brings much needed financial relief to many people. The process, however, is often complex and can create even more stress for people who are already under an immense amount of pressure. At Michael H. Schwartz, P.C., our White Plains bankruptcy lawyer can take the burden off your shoulders.
Attorney Schwartz understands both the state and federal bankruptcy systems and can help you navigate through the one that is best for you. He will also explain whether it is most beneficial for you to claim exemptions under federal or state law.
If it is time for you to file for bankruptcy, call him today or contact Michael H. Schwartz, P.C., online to schedule a free consultation and to learn how we can help.