Bankruptcy laws, depending on the state, can be quite straightforward or extremely complicated when it comes to exemptions. Knowing what your state's exemption laws is vital in developing a good strategy when it comes to filing for bankruptcy.
To the benefit of many, the state of New York has recently passed (January 2011) new exemption laws which actually help consumers protect more assets than in prior years, giving you a better chance at keeping your property, automobiles and other assets.
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The single largest change with regard to the new laws is that New York residents have the ability to choose between the New York exemption statutes and the federal exemption statutes during their Chapter 7 or Chapter 13 bankruptcy procedure. This has never before been the case in New York and should help give people more options during the process.
Even though the changes outlined in this article should give you a better understanding of what you are eligible for, they also make the overall process more complex, requiring a knowledgeable and experienced eye to make sure everything is going as smoothly as possible. This makes the legal counsel of a bankruptcy attorney an asset in the devising an efficient bankruptcy plan.
New York State Bankruptcy Exemption Changes
In its most basic form, New York law protects all or a portion of your property from being seized by creditors or the bankruptcy trustee in a Chapter 7 bankruptcy. In a Chapter 13 bankruptcy, you are generally allowed to keep all of your assets and property. Understanding the difference between the two classifications will allow you to figure out what exemptions you are legally allowed to pursue.
Fortunately for New York residents, bankruptcy exemptions on a federal level are more lenient than what you will find in the state, making some of the specific exemptions much more attractive in many situations.
The biggest changes that you may now be eligible for are as follows:
•Homestead Exemption - increased from $50,000 to $125,000 for property in upstate New York, and up to $150,000 for property in the downstate area.
•Automobiles - one motor vehicle up to $4,000; if the motor vehicle is equipped for use by a disabled person, you may be eligible for $10,000.
•Cash Exemption - Whereas the New York State laws do not allow for cash exemptions, federal law dictates that you can have a $1000 exemption.
•Jewelry and Art - The original law only had exemptions for a wedding ring and a watch worth up to $35. With the new exemptions, a wedding ring is still covered, but the watch exemption is increased to $1,000 and now includes other jewelry and works of art.
•Tools of Trade - This exemption, which relates to the working tools and implements that are necessary to carry on one's business, was first pinned at $600, but has now been increased to $3,000
•Aggregate Bankruptcy Exemption - This is the total for cash, household goods and clothing that an individual owns and has been increased from $5000 to $10,000.
With all these large increases in exemptions, a person filing for bankruptcy now is in a much better situation than even just one year ago. Although bankruptcy is something that nobody wants to deal with, your ability to protect your assets has become much greater.
This is definitely good news for all New York residents who may have to eventually deal with bankruptcy, but this does not mean that it should be taken any less seriously or cautiously than before. With this expansion of exemptions, a qualified bankruptcy attorney will be able to map out exactly what is necessary for the process while putting you in a position to keep the greatest amount of assets and lessening the effect of bankruptcy on your life.
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