Tuesday, June 28, 2011

Do I Lose Everything If I File Bankruptcy?

There are a combination of state and federal laws that protect you so that even if you owe a hundred times more debt than what you have in assets, you will not lose everything that you have and walk away penniless when you file bankruptcy to discharge your debt. The property exemption laws ensure that you get to keep some of your property so that you can continue to live. So what property is shielded from the reach of creditors? Here is a partial list of what is protected from creditors in the State of New York:

Homestead Exemption
New York Exemption.  Real property including co-op, condo, or mobile home, up to $150,000 for the counties of Kings, New York, Queens, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester, and Putnam. $125,000 for the counties of Dutchess, Albany, Columbia, Orange, Saratoga, and Ulster. $75,000 for the remaining counties in the state. A husband and wife, if filing joint bankruptcy, may double the amount.

CPLR § 5205(a) Personal Property Exemptions
1) All stoves and home heating equipment kept for use in the judgment debtor's dwelling house and necessary fuel for one hundred twenty days; one sewing machine with its appurtenances;
2) Religious texts, family pictures and portraits, and school books used by the judgment debtor or in the family; and other books, not exceeding $500 in value, kept and used as part of the family or judgment debtor's library;
3) A seat or pew occupied by the judgment debtor or the family in a place of public worship;
4) Domestic animals with the necessary food for those animals for 120 days, provided that the total value of such animals and food does not exceed $1,000; all necessary food actually provided for the use of the judgment debtor or his family for 120 days;
5) All wearing apparel, household furniture, one mechanical, gas or electric refrigerator, one radio receiver, one television set, one computer and associated equipment, one cellphone, crockery, tableware and cooking utensils necessary for the judgment debtor and the family; all prescribed health aids;
6) A wedding ring; a watch, jewelry and art not exceeding one thousand dollars in value.
7) Tools of trade, necessary working tools and implements, including those of a mechanic, farm machinery, team, professional instruments, furniture and library, not exceeding $3,000 in value, together with the necessary food for the team for 120 days, provided, however, that the articles specified in this paragraph are necessary to the carrying on of the judgment debtor's profession or calling;
8) One motor vehicle not exceeding $4,000.00 in value above liens and encumbrances of the debtor; if such vehicle has been equipped for use by a disabled debtor, then $10,000.00 in value above liens and encumbrances of the debtor; provided, however, that this exemption for one motor vehicle shall not apply if the debt enforced is for child support, spousal support, maintenance, alimony or equitable distribution, or if the state of New York or any of its agencies or any municipal corporation is the judgment creditor; and
9) If no homestead exemption is claimed, then $1,000 in personal property, bank account or cash.

Debtors who do not claim homestead exemption, may exempt cash, including savings bonds, tax refunds, bank and credit union deposits of up to $5,000.00, or an aggregate value up to $10,000.00 accounting for cash as well as exemptions for personal property taken under CPLR § 5205(a), whichever cash amount is less.  Personal property exemptions claimed under CPLR § 5205(a) may not exceed $10,000.00 total, including limited annuity.

Other Exemptions
Alimony and child support;
Property of business partnership;
ERISA-qualified benefits, IRAs, & Keoghs & income needed for support;
Public retirement benefits;
Burial plot without structure up to 1/4 acre;
College tuition savings program trust fund;
Lost future earnings recoveries needed for support;
Personal injury recoveries up to 1 year after receiving;
Recovery for injury to exempt property up to 1 year after receiving;
Security deposit to landlord or utility company;
Spendthrift trust fund principal, and 90% of income if not created by debtor;
Wrongful death recoveries for person you depended on;
Annuity contract benefits due the debtor, if debtor paid for the contract; there is a $5,000 limit if purchased within 6 months prior to filing and not tax-deferred;
Cash surrender value of life insurance;
Disability or illness benefits up to $400 per month;
Life insurance proceeds and avails if the beneficiary is not the debtor, or if debtor's spouse has taken out policy;
Life insurance proceeds left at death with the insurance company, if clause prohibits proceeds from being used to pay beneficiary's creditors.

Public Benefits Exemption
Aid to blind, aged, or disabled;
Crime victims' compensation;
Public assistance;
Social Security;
Unemployment compensation;
Veterans' benefits;
Workers' compensation.

Wage Garnishment Exemption
100% of pay of noncommissioned officer, private, or musician in U.S. or N.Y. state armed forces;
90% of earned but unpaid wages received within 60 days before & anytime after filing;
90% of earnings from dairy farmer's sales to milk dealers.

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