New York Bankruptcy Exemptions

New York's bankruptcy exemption laws protect property in bankruptcy and are essential to a fresh start. Not only will you reduce debt and straighten your finances, but New York bankruptcy exemptions will let you keep what you need to work and live. But exemptions protect essential assets only, not unnecessary luxury goods, and learning about the following can help prevent a costly property loss:

• the exemptions available under New York and federal exemption systems
• what happens to property you can't protect with an exemption, and
• if you've lived in New York long enough to use New York's bankruptcy exemptions.

The information below will help. Also, try our ten-question bankruptcy quiz. It flags areas you'll want to be reviewed by a local bankruptcy lawyer.

Using Exemptions When Filing for Bankruptcy in New York

New York filers are fortunate because they have two exemption choices—the state or the federal bankruptcy exemptions. You'll want to review each list carefully and compare it to the property you own because you can't use exemptions from both lists. If you decide to use New York's state exemptions, you can also use the federal nonbankruptcy exemptions.

Choosing an Exemption List in a New York Bankruptcy

To help you make an informed choice, we've charted the New York and federal exemption sets and explained essential differences. You'll also find New York and federal exemption links you can use to review the exemption statutes.

Our New York Bankruptcy Analysis

If you have significant equity in your home, you'll likely want to use New York's exemptions. The homestead exemption amounts are far more generous than the federal exemptions. If you don't own a home, you must look closely at the motor vehicle exemption, household goods exemptions, and others before making your choice.

Exemption caution. Our New York bankruptcy exemption analysis is for illustration purposes only and won't apply in all cases. A bankruptcy lawyer will have current information and be in the best position to help you protect your assets in bankruptcy. Also, the state exemptions below aren't being updated and could have changed since the last update. Federal exemption amounts are current through March 31, 2025.

Other New York Bankruptcy Exemptions

Below you'll find more New York exemptions, but it's not an exhaustive list. As with all exemptions, check for current amounts and qualification requirements.

New York Charitable Benefit, Injury Claim, and Wage Exemptions

• Debtor & Creditor § 282 – Crime victims' compensation, public assistance, workers' compensation, unemployment compensation, veterans' benefits.
• Debtor & Creditor § 282(3)(iii) – $9,000 for personal bodily injury; wrongful death benefits as needed.
• Soc. Serv. 137-a - 100% of earnings if receiving public assistance.
• CPLR 5205 – 90% of earned but unpaid wages received within 60 days before & anytime after filing.
• CPLR § 5205; Debtor & Creditor § 282(2)(d) – Court-ordered alimony, maintenance, or child support to the extent reasonably needed for support.

Miscellaneous New York Exemptions

• CPLR § 5205 - Annuity contract benefits due if the debtor paid for the contract.
• § 3212 - Disability, illness, or annuity contract benefits.
• 3212; Est. Pow. & Tr. 7-1.5; C.P.L.R. 5205(i) - Life insurance proceeds.
• Partnership 51 – Business partnership property

Important retirement benefit note. Federal law lets all filers keep tax-exempt retirement accounts in bankruptcy. These retirement accounts include 401(K)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and traditional and Roth IRAs to $1,512,350 per person. (11 U.S.C. 522(b)(3)(C); (n); amounts valid for bankruptcy cases filed between April 1, 2022, and March 31, 2025.)

What Happens to Property You Can't Exempt in a New York Bankruptcy?

It will depend on the chapter you file. In Chapter 7 bankruptcy, you lose property not covered by an exemption. The bankruptcy trustee responsible for managing your case will sell the property for the benefit of your creditors.

In Chapter 13 bankruptcy, you can keep all of your property; however, that luxury comes at a price, literally. You'll pay your creditors the value of any property not covered by an exemption in your Chapter 13 repayment plan.

For example, say you own a car outright worth $3,000, and your state has a vehicle exemption of up to $5,000. Here's what would happen in each chapter.

• Chapter 7 Bankruptcy. If you file for Chapter 7 bankruptcy, you will get to keep your car because the exemption would protect the equity fully. In the same example, if your vehicle were worth $15,000, the bankruptcy trustee would sell your vehicle, pay you $5,000 for the exemption, and distribute the rest to your unsecured creditors.
• Chapter 13 Bankruptcy. In Chapter 13, you wouldn't need to pay extra to your creditors through your repayment plan. However, if the car were worth $15,000, you'd need to pay your creditors at least $10,000 (minus sales costs) through your plan.

Keep in mind that these examples don't take into account a vehicle loan. You'll find more information below.

Protecting a Financed Home or Car in a New York Bankruptcy

Many wonder if they can wipe out a home mortgage or car loan and keep the property without paying more. The simple answer is "No." Protecting the equity with an exemption will keep the Chapter 7 trustee from selling it, and you won't have to pay extra to keep it in Chapter 13, but there are more steps to take.

In a Chapter 7 case, the mortgage or car payment must be current, and you'll need to be able to continue to make the payment. Why? Because when you purchased it, you gave the lender a property "lien." The lien created a secured debt allowing the lender to take back the property if you don't pay as agreed, even in bankruptcy. So if you're behind on the payment and file for Chapter 7, you'd lose the property. Instead, consider catching up on arrearages in Chapter 13.

Learn more about how mortgages work in bankruptcy and how to file for bankruptcy without losing a car.

What Are the New York Bankruptcy Exemption Timing Rules?

It's tempting to move to a state with significantly more generous bankruptcy exemptions when filing for bankruptcy. But it doesn't work that way. To prevent people from abusing the system, filers must live in the state for at least two years—otherwise, they must use the previous state's exemptions. Here's how it works.

• If you've made your permanent home (your "domicile") in your current state for at least two years, you can use the state's exemptions (or the federal exemptions if allowed).
• If your domicile hasn't been in the same state for two years, the rules get more complicated, so prepare yourself. It sounds so strange we'll explain it in three different ways so you know you didn't read it wrong. Here goes: You'll choose the state you lived in the longest during the 180 days immediately before the two years before filing.

Did you get that? If not, here's a way to figure it out. Count back two-and-a-half years. Then ask yourself where you lived the longest during the first six months of that two-and-a-half-year period.

Still confused? Let's try an example. Suppose you planned to file on January 1, 2022. Your two-and-a-half-year period would start July 1, 2019, and you'd qualify to use the exemptions of whichever state you resided in the most from July 1, 2019, through December 31, 2019. You wouldn't have to file your case there, but you'd use that state's exemptions. Hopefully, that helps!

Learn more about timing your bankruptcy filing, including when to delay or avoid bankruptcy.

Special Homestead Exemption Rules

The homestead exemption protects your ownership interest in your home. You'll need to read your state's homestead statute to determine the specifics, such as the amount of equity and acreage covered, whether the exemption protects a manufactured home, and if you need to file a homestead exemption with the county clerk. But in all states, the property must be your residence. Also, you'll need to comply with a federal timing law—here's the rule:

You must live in the home for over 40 months before filing for bankruptcy. Otherwise, your homestead exemption is capped at $189,050 if you file on or after April 1, 2022 (the amount changes every three years). This cap won't apply if you bought your home with home sales proceeds from that state.

Learn about the Chapter 7 Homestead Exemption.

Navigating Your New York Bankruptcy Case

Bankruptcy is an unusual area because it's essentially a qualification process. The laws provide instructions for completing a 50- to 60-page bankruptcy petition, and because all rules apply in every case, you can't skip a step.

One way to keep track of your research is to use the bankruptcy forms as an outline. You'll find links to the exemption-related bankruptcy forms and other exemption resources in the chart below. You can also look at the list of Chapter 7 and 13 bankruptcy forms to see where this topic fits in the bankruptcy scheme. And this handy bankruptcy document checklist will help you gather the things you'll need to complete the petition.

Need More Info?

We want to help you find the answers you need. Go to TheBankruptcySite for more easy-to-understand bankruptcy articles, or consider buying a self-help book like The New Bankruptcy by Attorney Cara O'Neill.

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by consulting with a local bankruptcy lawyer.

Updated August 17, 2023