New York Bankruptcy Exemptions

Exemptions are the rules that determine which of your assets you keep when you file bankruptcy. New York is an "opt-out" state — sort of. Unlike most opt-out states, New York lets its residents choose between the New York state exemption scheme and the federal exemption scheme. The choice can be the single most important decision in a Chapter 7 case, and it is not always obvious. Below is the framework we use to make the call.

Exemption amounts change. The figures below are current at writing, but New York indexes most state exemptions every three years and the federal exemptions are adjusted every three years on April 1. We use live numbers at the petition date.

The Homestead Exemption

The homestead exemption is the biggest single difference between the two schemes for New York homeowners:

New York state exemption (CPLR 5206): Tiered by county. Currently roughly $204,000 of equity in counties including New York, Bronx, Queens, Kings, Nassau, Suffolk, Rockland, Westchester, and Putnam. Lower amounts for less expensive counties. Doubled for married couples filing jointly who both own the property.
Federal exemption (11 USC 522(d)(1)): Approximately $30,000 of equity. Doubled for joint filers.

For most New York homeowners with meaningful equity, the New York homestead is dramatically more generous — and the New York state scheme is the right pick.

Motor Vehicle Exemption

New York state: $5,150 of equity in one motor vehicle (higher amount for a vehicle equipped for a disabled debtor).
Federal: Approximately $4,800 of equity in one motor vehicle.

Household Goods, Clothing, and Personal Property

New York state: Up to $11,975 aggregate in furniture, appliances, household goods, clothing, jewelry, books, family Bible, and similar property. Specific items have individual caps.
Federal: Up to $700 per item, with a $14,875 aggregate cap in household furnishings, books, clothing, and similar property.

Tools of the Trade

New York state: Up to $3,575 in working tools, professional instruments, books, and similar property necessary for the debtor's trade or profession.
Federal: Approximately $2,800.

Retirement Accounts

Both schemes fully exempt qualified retirement assets — 401(k), 403(b), 457, defined benefit pensions, and similar ERISA-qualified plans. IRAs and Roth IRAs are also fully exempt up to a high statutory cap (currently around $1.5 million). The retirement exemption is the same under both schemes in practice; it is rarely the deciding factor.

Wages

New York state: 90% of wages earned within 60 days before filing.
Federal: No specific wage exemption beyond the wildcard.

Cash and Bank Accounts

New York state: $1,150 of cash if the debtor does not claim the homestead exemption.
Federal: No specific cash exemption beyond the wildcard.

The Wildcard Exemption

The wildcard is what makes the federal scheme attractive to renters and to homeowners without much equity:

New York state: No general wildcard. (There is a $1,150 cash exemption for non-homestead filers and a small unused-homestead supplement, but no broad wildcard.)
Federal: Approximately $1,475 plus up to $13,950 of unused homestead exemption. A renter or a low-equity homeowner has roughly $15,000 of wildcard available, useable on cash, tax refunds, bank balances, or any other property.

The federal wildcard is the reason most New York renters file under the federal scheme. The New York scheme is the reason most New York homeowners with material equity file under the state scheme.

Other Exemptions

Public benefits. Social Security, unemployment, public assistance, veterans' benefits, workers' compensation, crime victim compensation, and similar benefits are exempt under both schemes.
Insurance proceeds. Life insurance benefits, disability benefits, and certain annuity proceeds are exempt subject to specific rules.
Personal injury recoveries. Up to $9,300 (federal) or full exemption (New York for compensatory portion).
Domestic support. Alimony and child support to the extent reasonably necessary for support of the debtor and dependents.

Joint Filings and "Stacking"

Married couples filing jointly can each claim a full set of exemptions, effectively doubling most amounts. Both spouses must select the same scheme — you cannot mix state and federal exemptions in a single case.

Domicile Requirements

To use a state exemption scheme, the debtor must have been domiciled in that state for 730 days before filing. Recent movers to New York may be required to use the exemption scheme of their prior state, or in some cases the federal exemptions if the prior state's scheme is unavailable to non-residents.