Are There Any Bankruptcy Exemptions in New York?
Bankruptcy laws were created to give people a fresh start and second chance when completely overwhelmed by debt and unable to make their ends meet. The idea is to get you back on your feet and to put you in the best position to succeed. In order to do so some of your property is legally protected from your creditors in bankruptcy no matter how much you owe to them. Even if you owe someone a million dollars when you file for bankruptcy you will not be forced to sell everything you have to pay it back. The property you need to keep in order to maintain a productive lifestyle is protected in bankruptcy by rules known as “property exemptions”. In New York people who file for bankruptcy protection have the added benefit of being able to choose between the Federal Bankruptcy exemptions (11 U.S.C. § 522(d)), or the New York State exemptions depending on their financial situation and bankruptcy goals.
Many potential clients come to our offices aware that they have a choice of exemption schemes but are unclear as to which way to go. It really depends on your specifics, but as long as you have lived in New York for a minimum of two years you will have the choice of either the Federal or New York State exemptions. Each set of exemptions protects individuals, so if a legally married couple files jointly they may also double the exemptions available to them.
You must choose one set of exemptions, you may not mix and match from the Federal and State exemptions. However, New York State exemptions are numerous and generous, and there are also some Federal non-bankruptcy exemptions that can be used in addition to the state exemptions. So while you may not use both exemption systems, some federal protection exists outside the Federal Bankruptcy exemptions that can be used in addition to the New York State exemptions. These non-bankruptcy exemptions protect your wages, social security benefits, veteran’s benefits and civil service benefits.
Some of the most common questions clients have about the New York exemptions are how they can protect homes, car and retirement accounts. Homes are protected under the “Homestead” exemption which protects the home’s equity from any creditor action. In New York City the exemption protects up to $165,550 in home equity. Cars are also protected with exemptions of up to $4,425 in equity available under the New York system. IRAs, 401Ks, and similar retirement plans all have unlimited exemptions and are protected in their entirety.
Here’s the thing. Even with exemptions, since homes and cars are secured assets they can technically be up for grabs to your creditors in a bankruptcy depending on the situation. However, a qualified bankruptcy attorney will have many options available and strategies to employ to keep you in your home and driving your car. When it is in our client’s best interest and important to them we have always found a way to keep them in their homes, and cars.
If you are looking into the available exemptions in New York, and are curious about which assets can be protected, or how you can keep you home and car in bankruptcy please give the Law Offices of William Waldner a call at 212-244-2882 to arrange a free bankruptcy consultation today. We will get the creditors off your back immediately, rid you of your toxic debt and get you on the road to recovery while doing everything we can to keep you in your home and driving your car. As of 8/31/16 we have a 99% Chapter 7 Bankruptcy discharge record in New York City.
This article is intended for educational purposes only. By reading this article no attorney-client relationship has been created.