Beginning January 22, 2011, individuals filing for bankruptcy protection in New York were given the option of choosing either the New York State or Federal Exemptions to determine what personal property could be protected from creditors and trustees. This has proven to be a major benefit, particularly to those individuals who either rent or own homes with little or no equity.
The primary factor in determining which exemptions to claim in bankruptcy has always been home ownership. Under the old New York Law, there was, and still is to some extent, a “tradeoff” between protecting equity in a home and protecting “cash” assets such as bank accounts, non-retirement stock accounts, and the right to retain a tax refund in the year that a case is filed.
Now, under the Federal Exemptions, in certain circumstances, you can do both. Under the Federal “Wildcard” Exemption, an individual is now allowed to protect upon to $10,800.00 ($21,600.00 for a couple) in equity in a home PLUS up to another $10,825.00 ($21,650.00) in “any other” property, such as bank accounts, stock accounts, tax refunds, or additional equity in a late model automobile.
This has dramatically changed the landscape for an individual considering bankruptcy in New York. In a majority of cases, an individual who has marginal equity in an asset no longer has to fret about whether or not they will have to “make a deal” with a Chapter 7 Trustee to repurchase what was previously non-exempt equity in either a car or a tax refund, or in the alternative, either file Chapter 13 bankruptcy or not file at all.
If you have been considering bankruptcy, but have been afraid of losing your car or your tax refund, fear no more. Now is the time pull your head out of the sand and explore your options with an experienced bankruptcy attorney.