Bankruptcy — What Property is Exempt

Exempt property is simply property that you can keep and protect from your creditors, and your Trustee, when you file Chapter 7 bankruptcy.

Protecting Exempt Property should help a debtor enjoy the “fresh start” provided by bankruptcy. The property that you can exempt is determined by New York law if you have established residence here for at least two years. Effective January 22, 2011, the exemptions a New York resident can choose to claim are those available:

1. Under the laws of New York, or under any federal law except Bankruptcy Code § 522(d) (collectively referred to herein as the "New York Exemptions"); or
2. Under Bankruptcy Code § 522 (d) (collectively referred to herein as the "Federal Exemptions").

If you have lived in New York for less than two years prior to your bankruptcy filing, the exemptions that you are allowed to claim are either those available:

1. Under the laws of the State in which you lived for the six months prior to the two year period (or 910 days/2-1/2 years prior to the filing); or
2. The federal exemptions.

If a husband and wife file a joint petition, they are each entitled to exempt property, which frequently results in a doubling of the allowable exemption. However, joint debtors cannot separately choose the New York Exemptions and the Federal Exemptions. Each debtor must claim the same exemption scheme

The New York Exemptions

For debtors claiming the New York Exemptions, the "per person" exemptions allowed are as follows:

1. Residence – The amount of the "homestead exemption" protecting equity in your residence, which also applies to mobile homes, shares of stock in a cooperative apartment and a condominium unit used as your primary residence, is determined by the location of said residence, as follows:
   • $150,000.00 for the five boroughs of New York City and the following counties: Nassau, Suffolk, Westchester, Rockland and Putnam;
   • $125,000.00 for Orange, Ulster, Dutchess, Columbia, Saratoga and Albany counties;
   • $75,000.00 for Sullivan and Greene counties, and all other counties in New York State.

   In order to be able to claim this "homestead exemption" your name must appear on the deed to your residence. If a husband and wife jointly own the residence and they file a joint bankruptcy they can each claim a "homestead exemption", thereby doubling the amount of equity that can be protected. Remember that "equity" is the value of the property less all liens secured by it (ie., mortgages, judgments, tax liens, etc.).

2. Motor Vehicle – You may exempt $4,000.00 total equity in one vehicle, providing your name appears on the title, either as sole owner or a joint owner. If a husband and wife jointly own a vehicle and they file a joint bankruptcy petition, they can claim a combined exemption of $8,000.00 on this one vehicle. For a vehicle equipped for use by a disabled person the exemption is $10,000.00, or $20,000.00 if titled to both debtors in a joint filing.
3. Household goods and clothing – An individual debtor can exempt up to $10,000.00 in value for clothing, wearing apparel and wedding rings.
4. Tools of the trade – Up to $3,000.00 in total equity.
5. Burial plots of unlimited value, as long as less than 1/4 acre in size.
6. Health aids, including guide dogs – Exempt to the extent necessary for the reasonable requirement of debtor and his family.
7. Government benefits – VA, Social Security and AFDC benefits are exempt.
8. College TSP programs – Fully exempt if debtor is owner, beneficiary and a minor; $10,000.00 if debtor is the owner but not a minor.
9. Life Insurance policies and annuities – Fully exempt in most cases.
10. Death Benefits – Unlimited exemption, providing debtor is the spouse, or a dependent, of the insured.
11. Military Pay – Fully exempt, except as against claims for child and spousal support.
12. Alimony, support and maintenance – Exempt to the extent reasonably necessary for the support of debtor and his dependents.
13. Pension, profit sharing and stock bonus plans – Fully exempt.
14. Crime Victim Reparations Award – Unlimited exemptions.
15. Payment for Wrongful Death of Person or Whom Debtor was a dependent – Unlimited exemption, to the extent necessary for the support of debtor and dependents.
16. Personal injury claims – Exempt up to $7,500.00.
17. Payment for loss of future earnings – Exempt to the extent necessary for support of debtor or dependents.
18. Claim for damage to exempt personal property – Unlimited exemption for one year after the collection of the judgment.
19. Rent or utilities deposit – Unlimited exemption.
20. Workers Compensation or Disability Benefits – Unlimited, except as against order for support.
21. Illness-related benefits or Unemployment Benefits – Unlimited exemptions.
22. Partners right to partnership property – Unlimited exemption if claim made against partner; not exempt as to any claim made against the partnership.
23. Public Assistance – Unlimited exemption.
24. Earnings of person receiving public assistance – Unlimited exemption, as long as debtor is receiving public assistance.
25. Volunteer ambulance workers benefits, volunteer firefighters benefits, police pension fund, teacher's pension – Unlimited exemption.
26. IRAs, Keogh Plans, 401k Plan – Unlimited exemption.
27. Trust created by someone other than the debtor (spendthrift trusts) – Unlimited exemption.
28. Income from a trust whose principal is exempt – Up to 90% is exempt, except such portion determined to be unnecessary for the reasonable requirements of the debtor and his dependents.
29. Income from a Retirement Plan or Keogh – Fully exempt.
30. Earnings for personal services rendered within 60 days – 90% exempt.
31. Alimony, child support and separate maintenance – Exempt to the extent reasonably necessary for the support of debtor and his dependents.
32. Milk proceeds – Milk produced on a farm is 90% exempt
33. Shares held in a Savings & Loan Association – $600.00 is exempt.
34. Alternative Cash Exemption - If a debtor is not using a homestead exemption to protect equity in his residence, he can exempt up to $5,000.00 in cash on hand, funds on deposit in bank accounts and anticipated tax refunds. In a joint filing, where appropriate, one debtor can choose to claim the homestead exemption while the other can claim this $5,000.00 “alternative cash exemption”.
35. Domestic Animals – Exempt up to $1,000.00 in value.
36. One watch, jewelry and art – Exempt up to $1,000.00 in value.
37. Wheelchairs, guide dogs, etc – Fully exempt.
38. Books – Exempt up to $500.00 in value.
39. Wildcard – If a debtor is not using a homestead exemption to protect equity in his residence, he can exempt an additional $1,000.00 in personal property, cash or funds in a bank account

The Federal Exemptions

For debtors claiming the Federal Exemptions, the "per person" exemptions allowed are as follows:

1. Residence – Up to $21,625.00 in value. Again, if a husband and wife file a joint petition and they jointly own the residence they can claim a combined exemption of $43,250.00.
2. Motor Vehicle – Exempt up to $3,450.00 equity in one vehicle, providing your name appears on the title either as sole owner or a joint owner. If a husband and wife jointly own a vehicle and file a joint bankruptcy, they can claim a combined exemption of $6,900.00 in this one vehicle.
3. Household goods, furnishings, clothing, musical instruments and animals – Exempt up to $11,525.00 in the aggregate, with the exemption in any particular item not to exceed 550.00.
4. Jewelry – Exempt up to $1,450.00 in value.
5. Wildcard – Debtor's aggregate interest in any property exempt up to $1,150.00, plus up to $10,825.00 of any unused homestead exemption.
6. Tools of the trade – Up to $2,175.00 in total equity.
7. Life Insurance Contracts – Such contracts owned by the debtor are fully exempt. Generally pertains to "term life insurance".
8. Life Insurance Cash Surrender Value – Exempt up to $11,525.00 where the insured is debtor or spouse. Generally pertains to "whole life insurance".
9. Life Insurance payments – Right to receive from spouse's policy exempt to the extent reasonably necessary for the support of debtor and his dependents.
10. Health aids, Wheelchairs, etc. – Fully exempt
11. Social security, unemployment and local public assistance benefits – Fully exempt.
12. Veteran's benefits – Fully exempt.
13. Worker's compensation benefits – Fully exempt.
14. Employment-related/government disability/illness benefits – Fully exempt.
15. Private disability insurance – Exempt to the extent reasonably necessary to support debtor and dependents.
16. Alimony, support and maintenance – Exempt to the extent reasonably necessary to support debtor and dependents.
17. Retirement funds – Pensions, profit sharing plans, employee stock ownership plans (ESOP), stock bonus plans, employment annuities, IRAs, Roth IRAs, retirement plans and deferred compensation plans are fully exempt.
18. Payment for Wrongful Death of Person on Whom the Debtor was a dependent – Exempt to the extent necessary to support debtor and dependents.
19. Crime Victim's reparations award – Fully exempt.
20. Personal injury claims – Exempt up to $21,625.00.
21. Payment for loss of future earnings – Exempt to the extent reasonably necessary to support debtor or dependents
22. Thrift Savings Plan – Fully exempt.

If your equity in certain property exceeds the exemption allowed for it, a Chapter 7 Trustee could liquidate it. If you are not willing to risk this, your option is a Chapter 13 bankruptcy.

You should consult with our Experienced Bankruptcy Attorneys to determine whether or not your property is exempt.

Bankruptcy lawyers with offices in Middletown, New York serving Orange County, Sullivan County, Ulster County, Dutchess County, Rockland County, Westchester County and Putnam County and communities including Newburgh, Port Jervis, Goshen, Monticello, Liberty, Ellenville, New Paltz, Kingston, Poughkeepsie, White Plains and New City.

This Law Firm proudly practices Bankruptcy Law, helping clients file cases under Chapters 7, 13 and 11. According to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, we are considered to be a Debt Relief Agency.