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 must be paid to creditors.
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 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 (which could be 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 $27,900 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 $4,450 in value in one motor vehicle
Up to $14,875 total value in household goods or furnishings, wearing apparel, and other various types of property, but not more than $700 in any one item
Up to $1,875 total value in jewelry owned for personal use
Up to $2,800 in value in tools of the trade
Up to $27,900 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, to the extent necessary to support the debtor and any dependent of the debtor
Up to $14,875 in value of any unmatured life insurance contract
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 Property Exemptions
Personal Property Exemptions in New York
New York state bankruptcy exemptions for personal property are governed by New York 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 $675 in value, in addition to religious texts, family pictures and portraits and school books
Domestic animals in value up to $1,325
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 $1,325
Tools of the trade not exceeding $4,075
If no homestead exemption is claimed, then $1,325 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 $13,625. If a debtor does not claim a homestead exemption, and does not use the entire $13,625 exemption in personal property, the debtor can additionally exempt cash not to exceed the difference between $13,625 and the property exempted, or $6,825 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 $5,500, or $13,625 if equipped for use by a disabled debtor, above liens and encumbrances
A payment, not to exceed $10,250, on account of personal injury
Real Property (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:
$204,825 – Nassau, Suffolk, Kings, Queens, New York, Bronx, Richmond, Westchester, Rockland and Putnam Counties
$170,700 – Dutchess, Albany, Columbia, Orange, Saratoga and Ulster Counties
$102,400 – 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. 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 homestead exemption limits.
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The dollar amounts for the New York State personal and real property exemptions are adjusted every three years. The next adjustment is scheduled for April 1, 2027. The current amounts are listed at https://www.dfs.ny.gov/industry_guidance/exemption_from_judgments
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