In recent posts, I have discussed some of the long-awaited changes impacting the property that New York residents can protect from creditors (and trustees) in a Chapter 7 or Chapter 13 bankruptcy proceeding (“exemptions”) that will take effect on January 22, 2011.
Upon further reflection of the changes, beyond the massive increase in the homestead exemption (from $50,000.00 to up to $150,000.00 in the NY Metro area), non-homeowners, or homeowners with little or no equity, may now opt to use the Federal Bankruptcy Exemptions for the first time.
The guidelines as to which set of exemptions to use are very clear cut:
1. If a debtor must claim the NYS Homestead Exemption, they must claim all NYS exemptions (cannot use ANY Federal exemptions).
2. If a debtor can claim the Federal Homestead Exemption (or does not require any homestead exemption), they may claim EITHER NYS or Federal exemptions
Here are a sample of some of the Federal Exemptions
Homestead (11 U.S.C. 522(d)(1)) – $21,625.00*
Household Furnishings (clothing/appliance/furniture) (11 U.S.C. 522(d)(3)) – $11,525.00
Jewelry (11 U.S.C. 522(d)(4)) $ 1,450.00
Motor Vehicle (11 U.S.C. 522(d)(2) $ 3,450.00
Tools of Trade (11 U.S.C. 522(d)(6)) – $ 2,175.00
Personal Injury Recovery (11 U.S.C. 522(d)(11)(D)) – $21,625.00
*WILDCARD (11 U.S.C. 522(d)(5)) – $ 1,150.00 plus any unused portion of Homestead up to $10,825.00
The wildcard exemption is new to New York. This exemption can be used to supplement any other exemption relating to personal property (cash, tax refund, motor vehicle, furniture, tools of trade). For example, if you own a motor vehicle that was $6,000.00 in equity, under the NY exemptions, you can only protect $4,000.00 of that equity (plus the NY wildcard, if applicable), but if you claim the Federal Exemptions, you can COMBINE the wildcard with the standard Federal auto exemption of $3,450.00 and use an additional $2,550.00 of the wildcard to protect the remaining equity in that vehicle.
Please be reminded that each individual’s case is unique as is the combination of exemptions that could be used in each case. If you have any questions about the changes in the New York State Exemption Laws, please contact our office.