People contemplating bankruptcy always tend to wonder what are they able to keep if they file for bankruptcy. It's an important question that one should think about if they are considering bankruptcy. In New York, a debtor considering bankruptcy will need to decide between claiming property exemptions under state or federal law.
Contrary to what many people believe, there are many assets a person can keep despite filing for bankruptcy. These assets that a person does not have to relinquish to creditors are called exemptions. There are different exemptions that New York State Law provides that are different from Federal Law. A person must decide between state or federal exemptions. You can not mix and match the state and federal exemptions. It must be one or the other.
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New York State law allows people in debt to keep a large portion of equity in their homes. Debtors can also opt for a reasonable wildcard exemption under Federal law that can be applied to almost any asset.
Bankruptcy laws are complicated. There are many exemptions and exceptions to rules both on a Federal and State level. Although a person can file for bankruptcy on their own, it's a good idea to consult an experienced bankruptcy lawyer before making any decisions. A bankruptcy attorney can provide experienced advice and better equip a debtor to make the right choices for their own situation. A a person filing without the assistance of a bankruptcy attorney may not know logistics behind the different exemptions.
Here are some examples of assets that can be protected in Chapter 7 and Chapter 13 bankruptcy.
Under New York State Law, a debtor can keep:
a portion of the equity in their home. $150,000 for property in the New York downstate area for a single filing, $300,000 for a joint filing, equity in their vehicle worth up to $4000. If the car is equipped for a disabled person, they can keep $10,000, most household items and other personal property such as furniture, TV, radio, kitchen appliances, clothing, a computer, a cellphone, a wedding ring, $5000 either in a bank account or in cash as long as the homestead exemption is not taken, and most retirement accounts, pensions, and life insurance.
Under Federal Law, a debtor can keep:
up to $21,625 of the equity in their primary residence home, equity in their vehicle worth up to $3450, most household items and other personal property such as furniture, TV, radio, kitchen appliances, clothing, a computer, a cellphone, a wedding ring, certain retirement accounts such as, pensions, and life insurance, and a wildcard exemption of up to $11,975 ($1,150 of any property plus $10,825 of unused home equity exemption)
Determining what you're able to keep when filing bankruptcy in New York can be complicated. There are many laws and options to choose from when considering state vs federal exemptions. Navigating a bankruptcy filing without an attorney can be a costly mistake. A knowledgeable New York bankruptcy lawyer will better understand the differences between federal and state laws. They will be able to provide experienced advice that can help a debtor better position themselves for financial recovery.
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