What Gets Taken in Bankruptcy in New York?
Bankruptcy laws exist to help people get a fresh financial start when they are no longer able to pay their bills. The idea is to get you back on your feet, not to punish you for inability to pay. In light of this your basic necessities and most of your personal property are protected in bankruptcy so that you are in a better position to regain control of your financial life. There is a big misconception among consumers that creditors will come for your home, car, furniture, electronics, clothing, jewelry and anything else they can get their hands on when you file for bankruptcy. While some property may be liquidated when you file, the idea that you will lose anything is usually false. Unless you have a museum quality jewelry collection your creditors will likely have no interest.
The truth is that personal property has a relatively low resale value, and it’s not doing you or your creditors any good to take your possessions for pennies on the dollar. When you file for bankruptcy in New York, the current state exemptions will allow you to exempt most of your property through the law. You are actually protecting your assets from the bankruptcy trustee assigned to your case, not from your creditors. It is the job of the trustee to look at your assets and income listed in your bankruptcy and to try to find ways to pay your creditors from your assets that are not protected by the exemptions. New York state exemptions are generous, so our clients always keep their cars and homes and rarely lose their personal property. The exemptions determine exactly what and how much you can protect from the trustee.
In the majority of bankruptcy cases the trustee is looking for assets like home equity, vehicle equity, stocks, bonds, and unprotected retirement accounts as a way satisfy some portion of the debt you owe to your creditors. They are rarely interested in your TV, wardrobe, couch etc. Repossessing this type of physical property creates significant difficulties for the state as they are responsible for picking up the property, storing the property and selling the property. It doesn’t usually make economic sense for the trustee to do so, and the infrastructure for collecting bankruptcy petitioners’ property doesn’t exist on this level.
So what exactly can you protect from the trustee through exemptions, and what are you likely to lose? Every bankruptcy case is different. You need to work with a qualified attorney in the state of New York, and you need to be prepared prior to filing. After meeting with an attorney you will have a good idea of how your bankruptcy discharge is likely to go, and should have very few surprises when the process is over.
That being said, generally speaking the things you can protect include: your home, car, clothing, jewelry, furniture and appliances, pensions and life insurance policies, your professional equipment or tools, and your personal items.
Now extravagant fur coats, very expensive jewelry, and multiple flat screen TV’s will be harder to protect, but can usually be protected in your bankruptcy. My clients have not lost anything they were not prepared to lose as of the date of this article.
There are multiple legal strategies a good attorney can use to protect your valuable belongings in bankruptcy, and our clients are often pleasantly surprised when they realize how much they will actually be keeping, not losing in their bankruptcy. Depending on your situation, financial goals and the property you wish to keep your attorney may recommend Chapter 7 or Chapter 13 bankruptcy and will be able to give you a great idea of what you can plan on keeping once your bankruptcy is over.
If you live in New York City and want to learn about how you can keep almost all your personal belongings while eliminating your toxic debt and credit card bills please give the Law Offices of William Waldner a call at 212-244-2882 for a free bankruptcy consultation. We will help show you how bankruptcy is a positive benefit for most struggling people, and not the punishment it can be rumored to be.
This article is intended for educational purposes only. By reading this article no attorney-client relationship has been created.