New York Bankruptcy Exemptions Explained (2025 Update)

Choosing the right exemptions is one of the most important decisions in a bankruptcy case—especially in New York, where state exemptions can far surpass the federal options. This guide explains both the state and federal exemptions, how to pick the best set, and what recent changes mean for your case.

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1. 🇺🇸 Choosing Between State vs. Federal Exemptions

• New York is a “choice” state: debtors who’ve lived in New York for at least two years can use either the federal exemptions or New York’s state exemptions—but not both en.wikipedia.org+8upsolve.org+8nolo.com+8debtlawyer.com.

• If you moved within the last two years, federal exemptions may be required by default .

• Best strategy: calculate both sets and pick the one providing the highest total protection.

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2. 📍 New York State Exemptions (updated April 1 2024)

Values adjust every three years based on inflation midhudsonbankruptcylawyers.com+10nolo.com+10maccolaw.com+10.

🏠 Homestead (Primary Residence)

• $204,825 in NY, Kings, Queens, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester & Putnam counties

• $170,700 in Albany, Dutchess, Columbia, Orange, Saratoga & Ulster

• $102,400 in all other upstate counties

• Note: Proposed 2025 amendment (S.8109A) raises these limits significantly—e.g., $600,000 in metro counties—once enacted.

🚗 Motor Vehicle

• Protect $5,500 of car equity

• Up to $13,625 if the vehicle is modified for disability

🛠️ Tools, Household, Personal Items

• Tools of the trade: $4,075

• Household/furniture/electronics/pets/clothing/etc.: $1,325 aggregate

💳 Cash & Wildcard

• Cash: up to $6,825 if not using the homestead exemption

• Wildcard: up to $1,325 (again, only if homestead exemption is unused) debtlawyer.com+5nolo.com+5maccolaw.com+5

💼 Retirement & Public Benefits

• All tax-qualified retirement plans are fully exempt, including IRA, 401(k), Keogh, etc. dfs.ny.gov+10nolo.com+10upsolve.org+10

• Unemployment, Social Security, public assistance, disability, veterans’ benefits, crime-victim compensation—all fully protected upsolve.org+1nolo.com+1

💵 Wages & Income

• 90% of earnings earned within 60 days before the filing date

• Farm income from milk

• Military pay

• Court-ordered child support or alimony as reasonably needed debtlawyer.com+2upsolve.org+2nolo.com+2

🚑 Injury & Legal Settlements

• Up to $8,550 for personal injury awards

• Future earnings or wrongful-death recoveries are also protected nolo.com+3upsolve.org+3maccolaw.com+3

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3. 🇺🇸 Federal Exemptions (Effective April 1 2025)

Indexed every three years under the Bankruptcy Code nysenate.gov+5debtlawyer.com+5maccolaw.com+5:

• Homestead: $31,575

• Vehicle: $5,025

• Jewelry: $2,125

• Household goods per item: $800, total cap $16,850

• Tools of trade: $3,175

• Life insurance loan value: $16,850

• Personal injury: $31,575

• Wildcard: $1,675 + unused homestead up to $15,800

• Retirement accounts (IRA/401k): $1,711,975 maccolaw.com+3debtlawyer.com+3nolo.com+3

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4. ✅ Which is Better for You?

• Married couples can double many amounts if filing jointly.

• If you have significant home equity, NY exemptions usually win.

• For people with high-value personal property, federal exemptions can be stronger.

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5. 🧩 Wildcard & Homestead Strategy

• In NY, you must choose: either claim homestead exemption or use wildcard/cash exemptions maccolaw.com+3nolo.com+3upsolve.org+3nysenate.govmesser-law.comdfs.ny.govdebtlawyer.com+2upsolve.org+2maccolaw.com+2.

• Consider filing jointly to maximize exemptions together.

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6. 💰 Protecting Non-Exempt Equity

• Chapter 7: Trustee may sell non-exempt assets

• Chapter 13: Repayment plan must pay unsecured creditors the value of non-exempt equity nolo.com

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7. 🔍 Recent & Pending Changes

• The NY Department of Financial Services last updated exemption amounts in April 2024; next scheduled update is April 2027 messer-law.com+8dfs.ny.gov+8nolo.com+8.

• Pending legislation (S.8109A) proposes to significantly increase homestead and vehicle exemptions (e.g., $600k home, $10k–$25k vehicle), indexed to home values upsolve.org+4nysenate.gov+4en.wikipedia.org+4. Watch for passage this session.

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8. 🧠 How to Choose & Maximize Exemptions

1. Calculate your assets: home equity, vehicles, personal property, cash, retirement, injury recoveries.

2. Map these assets against both exemptions schedules.

3. If you moved recently, verify domicile timeline under 11 U.S.C. § 522 debtlawyer.comnolo.com+1maccolaw.com+1dfs.ny.gov+5en.wikipedia.org+5nysenate.gov+5.

4. Consider filing jointly, if married, to combine exemptions.

5. Document everything meticulously on Schedule C.

6. Trustees often allow minor adjustments at the 341 meeting; major disputes require a court motion nolo.com.

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9. 📝 Sample Scenario

Resident of Westchester County owns:

• Home with $150k equity (exempt)

• Car with $4k equity (exempt)

• Household goods valued at $8k (exempt, under both)

• Tools of trade valued $5k (exempt $4k under NY, $3.1k Fed)

• $3k cash (exempt under NY)

• IRAs (exempt under both)

• No injury settlements

Result: NY exemptions better—fully protects homestead, car, cash, excess tools (may use wildcard or let go of small items).

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10. ✅ Final Takeaways

• Always compare both exemption sets—don’t assume federal is default.

• NY homestead exemption is unparalleled if you own your home.

• Use retirement and public benefit exemptions to shield essential assets.

• Stay alert to updates in 2027 or state legislation.

• Consult a bankruptcy attorney to ensure accurate exemption selection and compliance.

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💡 Next Steps for Readers:

• Download our free exemption comparison worksheet to plug in your assets.

• Schedule a free consultation to ensure you’re choosing the best option.

• Subscribe to our blog—updates when NY Legislature moves on S.8109A, or when exemptions adjust in 2027.