Property Exemptions In Bankruptcy
When a debtor files for bankruptcy, the federal Bankruptcy Code and New York law both provide for property exemptions. Exemptions are important primarily in a Chapter 7 bankruptcy filing, where exemptions determine what property the debtor is entitled to keep. In a Chapter 13 bankruptcy filing, property exemptions may affect how much unsecured debt creditors must be paid.
A Choice Between Federal And New York State Exemptions
A debtor in New York is permitted to use either the property exemptions contained in the federal Bankruptcy Code or the property exemptions provided by New York state law. However, the debtor may choose only one set of exemptions. Whether a debtor in New York should utilize the federal exemptions or the New York state exemptions will be determined by various factors. Generally, a debtor in New York who has substantial equity in his or her primary residence will utilize the New York state exemptions in order to take advantage of the generous homestead exemption provided by New York law.
To utilize the New York exemptions, a debtor must have resided in New York for a period of at least two years prior to the bankruptcy filing. If not, the debtor must utilize the exemptions as provided for by the laws of the state in which the debtor resided in the two-year period preceding the filing. If the debtor has resided in more than one state for the two-year period, then the debtor must use the exemptions provided for by the state in which the debtor resided for the greater part of the 180 days that preceded the two-year period preceding the bankruptcy filing.
Long Island Bankruptcy Attorney
Contact The Law Office of Andrew M. Doktofsky, P.C., at 631-812-7712 to find out what property exemptions you are entitled to in bankruptcy. Attorney Andrew M. Doktofsky has a thorough knowledge of both federal and New York state property exemptions. Call The Law Office of Andrew M. Doktofsky, P.C., today to determine what property exemptions apply to your particular bankruptcy case throughout the areas of Suffolk County and Nassau County, New York.
Federal Bankruptcy Property Exemptions
Under § 522 of the Bankruptcy Code, a debtor is entitled to the federal property exemptions when filing for bankruptcy, unless state law specifically allows only the state exemptions. Debtors in New York are permitted to utilize the exemptions contained in the Bankruptcy Code, including:
- Up to $23,675 in value in real or personal property that is used as a residence (includes condominium, co-op, or mobile home), or a burial plot
- Up to $3,775 in value in one motor vehicle
- Up to $12,625 total value in household goods or furnishings, wearing apparel, and other various types of property, but not more than $600 in any one item
- Up to $1,600 total value in jewelry owned for personal use
- Up to $2,375 in value in tools of the trade
- Up to $23,675 payment on account of personal injury
- The debtor’s right to receive certain benefits, including social security benefits, veterans’ benefits, pension and retirement benefits, and spousal maintenance or domestic support payments
- A “wildcard” exemption that can be applied to any property up to $1,475 in value, plus up to $13,950 of any unused portion of the homestead exemption. For debtors that do not need to use the homestead exemption (either because they do not own a home or there is no equity in the home), the wildcard allows an exemption of up to $15,425 in any property, including cash, bank accounts and tax refunds not yet received.
New York State Personal Property Exemptions
New York state bankruptcy exemptions for personal property are governed by New York’s Civil Practice Law and Rules § 5205 and New York Debtor and Creditor Law §§ 282 and 283. Debtors in New York that choose to utilize the New York state exemptions may exempt the following personal property in a bankruptcy filing:
- All stoves and heating equipment for use in the debtor’s home
- Books up to $550 in value, in addition to religious texts, family pictures and portraits and school books
- Domestic animals in value up to $1,100
- Wearing apparel
- Household furniture
- One refrigerator
- One television
- One computer
- One cell phone
- Cooking utensils and tableware
- A wedding ring
- Jewelry and art not exceeding $1,000
- Tools of the trade not exceeding $3,300
- If no homestead exemption is claimed, then $1,100 in additional personal property, cash or bank account
- Certain trust property for the debtor created by a person other than the debtor
According to N.Y. Debt. & Cred. Law § 283, a debtor can exempt an aggregate of personal property, including the items listed above, not exceeding $11,025.
If a debtor does not claim a homestead exemption, and does not use the entire $10,000 exemption in personal property, the debtor can additionally exempt cash not to exceed the difference between $10,000 and the property exempted, or $5,525 in cash, whichever is less. Cash means currency, savings bonds, bank accounts, and tax refunds not yet received. Note: The New York state cash exemption may not be used if the homestead exemption is used.
Under N.Y. Debtor & Creditor Law, the following property is also exempt in bankruptcy:
- Social Security benefits
- Unemployment compensation
- Local public assistance benefits
- Veterans’ benefits
- Disability or illness benefits
- Alimony or domestic support payments to the extent necessary for support
- Pension and qualified retirement plan payments
- One motor vehicle valued up to $4,425, or $11,025 if equipped for use by a disabled debtor, above liens and encumbrances
- A payment, not to exceed $8,275, on account of personal injury
Homestead Exemption In New York
Under New York Civil Practice Law and Rules § 5206, real or personal property, owned and occupied as the debtor’s principal residence (includes condominium, co-op, or mobile home), is exempt from the enforcement of money judgments. This exemption also applies to debtors filing for bankruptcy in New York.
The debtor’s principal residence is exempt in bankruptcy up to the following amounts in New York:
- $170,825 – Nassau, Suffolk, Kings, Queens, New York, Bronx, Richmond, Westchester, Rockland and Putnam Counties
- $142,350 – Dutchess, Albany, Columbia, Orange, Saratoga and Ulster Counties
- $85,400 – All other counties
The exemption limits apply to the value of the residence above liens and encumbrances, i.e. the debtor’s equity in the property. Additionally, this exemption applies to each individual debtor. So, if a joint bankruptcy petition is filed (by married debtors), and the property is owned by both debtors, then the amount of the exemption is doubled. In practical terms, debtors filing for bankruptcy in New York, who have equity in their homes that exceeds the federal homestead exemption, must utilize the New York property exemptions to take advantage of the much higher exemption limits.
The Law Office of Andrew M. Doktofsky, P.C. | New York Bankruptcy Lawyer
Contact The Law Office of Andrew M. Doktofsky, P.C., today for a consultation about what property you may be able to exempt in bankruptcy in New York. Andrew M. Doktofsky will help you determine what property exemptions apply to your Chapter 7 or Chapter 13 bankruptcy case. Call 631-812-7712 for a consultation about filing for bankruptcy in Suffolk County and Nassau County, Long Island, New York.
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