In order to determine how much cash you're able to keep when filing for bankruptcy, it's important that you consult a New York-based Bankruptcy Attorney. Roemerman Law has the expertise necessary to evaluate your finances and assist you in gathering the information needed during this.

Many people think that filing for bankruptcy would leave them with no cash, property, or other assets. In fact, bankruptcy is meant to protect you and your assets. Toward this goal, all your assets are separated between exempt and non-exempt ones. You may take advantage of several bankruptcy exemptions to protect any exempt assets—including cash—from your debtors.

When you file for Chapter 7 or Chapter 13 bankruptcy, the court will appoint a bankruptcy trustee to administer your case. In exchange for a bankruptcy discharge, your trustee can use either your cash or your property to pay back unsecured creditors. You can, however, keep any item of property or amount of money that is exempt under the bankruptcy exemption laws.

All states have such laws to protect your property, including New York. To ensure that creditors receive the same amount regardless of the chapter filed, each chapter treats non-exempt property—things not covered by an exemption—differently.

Specifically, if you file for Chapter 7 bankruptcy, you will keep all exempt property but lose any non-exempt assets. If you file for Chapter 13, you get to keep all your property, but will pay your creditors for non-exempt assets through your repayment plan.

The New York Exemption System

From the above, it becomes clear that determining how much cash you can keep when filing for bankruptcy depends on the exemptions you get. New York is unusual in that it lets you choose between the federal bankruptcy exemption scheme and the state exemption list.

The Federal Bankruptcy Exemption Scheme

If you choose the federal bankruptcy exemption scheme, you can use the so-called “homestead exemption.” This protects $27,900 of equity in your principal residence [1] as long as you live in the home. Your residential property can be a house, condominium, etc., or any other personal property used as a residence—for example, a residential trailer.

Federal exemptions also cover $4,450 for your motor vehicle, $1,875 for jewelry, $2,800 for tools of the trade, and $14,875 for household goods such as appliances, clothes, books, etc. Additionally, they cover $14,875 in loan value, accrued dividends, or a life insurance policy interest, as well as $27,900 for personal injury.

Crucially, you may also keep any award for the loss of future earnings, any recovery for the wrongful death of a person you relied on for support, and all compensation received due to being a crime victim.

Finally, $14,875 of any unused portion of your homestead exemption is available as part of the so-called wildcard exemption. This lets you exempt any property of your choosing, such as items of sentimental value.

Keep in mind that you can double the above amounts if you are married and are filing a joint bankruptcy.

The New York State Exemption List

If you choose to benefit from the New York State exemption list rather than the federal scheme, then you may also protect significant parts of your property, including:

  • Tools of the trade up to $3,575 in value.
  • Equity in a home that is used as a residence, up to a value that ranges between $89,975 and $179,950 depending on the location [2].
  • Equity in a vehicle up to $4,825 in value. The value can be as high as $11,975 if the vehicle is equipped for use by a disabled debtor.
  • New York’s wildcard exemption allows you to protect any personal property up to $1,175 if you don’t use the homestead exemption.
  • You may protect up to $11,975 of items such as stoves and fuel, family photos, books, food, clothing, furniture, TV, computer, phone, etc. [3].
  • You may also protect other personal property, such as security deposits, service animals, medical or dental accessories, and more.

As far as cash is concerned, you may protect:

  • Cash and banking account balances up to $6,000.
  • 90% of income received within 60 days before your filing for bankruptcy.
  • 100% of pay to members of the armed forces of the U.S. or N.Y.
  • Court-ordered alimony, maintenance, or child support to the extent reasonably needed for support.
  • Various pensions and public benefits, such as retirement plans, Social Security, unemployment compensation, disability, public assistance, workers’ compensation, and more.
  • Lawsuit awards and settlements. Specifically, you may protect $9,000 in damages compensating you for a personal injury—but not for pain and suffering. [4] You may also protect lawsuit money awarded to you for stolen, lost, or damaged property. Finally, you may exempt lost future earnings that compensate you for the wrongful death of someone you relied on for support.

Contact Roemerman Law

Property exemptions are a powerful tool—but you could lose your property if you don’t use them carefully. Generally, you don’t get to keep exempt property automatically. You need to make a list of your assets and file it along with other paperwork. The bankruptcy trustee will review this list and either approve it or file an objection with the court, leaving it up to the judge to decide whether you can keep the item in question or not. You must also avoid finessing your exemptions, as this can be interpreted as an attempt to commit bankruptcy fraud—a crime punishable by up to $250,000, 20 years in prison, or both.

To avoid any missteps and ensure that you take full advantage of the protection offered to you by bankruptcy law, you should contact a bankruptcy lawyer. They have the experience and expertise necessary to explore your options, examine if you qualify for bankruptcy in New York, and help you plot the best course for you.

Our experienced team at Roemerman law is committed to providing confidential advice and your initial consultation is absolutely free. Book your appointment today, so we can review your position and advise you on your choices and which type of legal arrangement best suits your situation.

References

[1] All amounts as of 2022. Cf. 11 USC § 522(d)(1), https://codes.findlaw.com/us/title-11-bankruptcy/11-usc-sect-522.html

[2] Cf. CPLR §§ 5206 (a), (d), and (e), https://codes.findlaw.com/ny/civil-practice-law-and-rules/cvp-sect-5206.html

[3] Cf. CPLR § 5205, https://codes.findlaw.com/ny/civil-practice-law-and-rules/cvp-sect-5205.html

[4] Debtor & Creditor § 282(3)(iii), https://codes.findlaw.com/ny/debtor-and-creditor-law/dcd-sect-282.html

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