Protect Your Assets with Federal and New York Bankruptcy Exemptions
Bankruptcy can be scary, as many people envision themselves living penniless and unable to afford a home or car. While bankruptcy may not be ideal, it’s also put in place to protect people who are going through financial hardship. Utilizing bankruptcy as intended can help put your debts behind you and start fresh.
And, thanks to bankruptcy exemption laws, you can keep a certain amount of property after your case is over. This way, you are not starting out with nothing. The property that you can keep is called ‘exempt property.’ Each state has their own exemptions, even though bankruptcy is otherwise governed by federal law.
In the state of New York, you can choose whether you want to use state or federal bankruptcy exemptions. To determine which exemptions you should follow, schedule a consultation with The Law Office of William Waldner.
State and Federal Bankruptcy Exemptions
Whether you file Chapter 7 or Chapter 13 bankruptcy, you can protect some of your property with an exemption. However, each chapter treats nonexempt property differently. In Chapter 7 bankruptcy, the trustee will sell your nonexempt property and distribute it to your creditors.
In Chapter 13 bankruptcy, you keep everything you own. But, you must pay the value of the nonexempt property in your repayment plan. This ensures that creditors receive the same amount, regardless of which chapter is filed.
Once you live in New York for 180 days, you are eligible to file bankruptcy. If you want to use the state exemptions, you’ll have to live in the state longer – at least 730 days. Otherwise, you will use the previous state’s exemptions.
New York is one of the states that lets you choose between state exemptions and federal exemptions. You can’t pick and choose which exemptions you want to use – a few on the state list and a few on the federal list. You must choose the system that works best for you.
Common New York Bankruptcy Exemptions
Below are some commonly used New York bankruptcy exemptions.
New York Homestead Exemption
With the homestead exemption, you are able to protect your home up to a certain value (typically $90,000 and $180,000), depending on which county in New York you live in. The purpose is to ensure that people who file for bankruptcy have a place to live when the case is over. Only a principal residence is allowed. You cannot use this exemption for a vacation or second home.
New York Motor Vehicle Exemption
You can also exempt the equity in one vehicle up to a certain amount. The reason for this exemption is because people need to be able to get to and from work. By filing the motor vehicle exemption, you can keep your vehicle and maintain your working hours.
New York Wildcard Exemption
The New York wildcard exemption lets you protect any personal property of your choice, up to a certain limit. For example, let’s say that you have more equity in your car than what’s allowed with the motor vehicle exemption. If you’re not using the homestead exemption, you can use the wildcard exemption to protect the additional amount.
Other New York Exemptions
Additional things you can protect through exemptions are:
- Stoves and heating equipment
- Books, school books and religious texts
- Cash and banking account balances
- Clothing and furniture
- Tools needed for your profession
- Uniforms, arms and equipment used in military
- Property or damages arising from the loss or damage of exempt personal property
Common Federal Bankruptcy Exemptions
Federal bankruptcy exemptions are very similar to New York bankruptcy exemptions. Every three years, the amounts for these exemptions change, so it’s important to speak with an experienced bankruptcy attorney for accurate numbers.
The federal bankruptcy exemptions include:
- Homestead exemption
- Personal property exemption (motor vehicles, jewelry, health aids, tools of the trade)
- Support exemptions
- Injury award exemptions
- Retirement account exemptions
- Wildcard exemption
Keep in mind that you cannot pick and choose which exemptions you want from the state and federal lists. You must pick one system and work with it. There are also nonbankruptcy exemptions at the federal level that can protect assets and property in bankruptcy, but they only apply to certain individuals and occupations.
Schedule a Bankruptcy Consultation Today
Because each bankruptcy case is unique, it’s best to meet with an attorney in New York to delve into the specifics of your case. The Law Office of William Waldner offers free consultations, so contact our team of bankruptcy lawyers today. We’ll look over your case and help determine which exemptions you should file for.