People who file for Chapter 7 or Chapter 13 bankruptcy in the State of New York are allowed to “exempt” and keep certain possessions. When you hear the word “exemption” think of the word “protection.”
When a possession is exempt it does not have to be turned over to the Trustee for sale and distribution. This means you and your family can continue to use and enjoy your exempted property.
Each bankruptcy debtor has the ability to exempt a certain amount of different types of property. Certain statutes allow you to protect a car, others allow you to protect your house, still others allow you to protect a certain amount of cash, etc.
Traditionally, what New Yorkers can exempt and protect was a matter governed by New York State law. Before the end of last year, the New York State exemptions were…paltry to say the least. For example, you could exempt cars with total equity of up to $2,400 and bank accounts containing up to $2500.
But that was then. You can say what you want about former Governor Patterson, but on his way out of office he gave New Yorkers in financial distress a phenomenal gift. On Christmas Eve, Governor Patterson signed legislation that significantly increased the amount of property debtors could exempt in their bankruptcy cases.
So instead of only being able to protect $50,000 worth of equity in a home, now a debtor can protect up to $150,000 worth of equity in their home. And if you and your spouse are both filing for bankruptcy relief – you can combine the amount of exemption power to protect a total of $300,000 of home equity.
As if that weren’t good enough, his legislation also allowed debtors to choose between the New York State exemptions and the Federal exemptions.
This means that instead of a “one size fits all” approach, bankruptcy attorneys in NYC can now evaluate our client’s cases under both the New York exemptions and the Federal exemptions. Once we examine the case under both sets of laws, we can work with our clients to choose which set of exemptions will work best for their particular situation.
Now with all of these choices, can you imagine filing bankruptcy on your own or with an attorney who is not familiar with the exemption statutes used in your state? Not only could you end up losing possessions that were eligible for exemption – but you might not even know that you were going to loose them until it was too late. Bankruptcy may not be rocket science – but it is not for the faint of heart.
Once again – this is why speaking with a knowledgeable bankruptcy attorney is so very important (Seems like I say that every few pages, eh? That shows you how important it is to keep open communication flowing with your attorney!).