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Federal law governs bankruptcy cases in the United States. When you file for bankruptcy, you will need to file your petition in one of the 94 federal judicial districts, and you cannot file a bankruptcy case in state court. However, bankruptcy cases filed in one state can still differ significantly from bankruptcy cases filed in another state. This is because each state has its own laws regarding available bankruptcy exemptions in a Chapter 7 liquidation case and in Chapter 13 repayment plans.

In Chapter 7 bankruptcy, you can apply exemptions to protect certain property and assets from liquidation by the bankruptcy trustee. In Chapter 13 bankruptcy, you can apply exemptions to reduce the amount you must pay your creditors during the course of your repayment plan. Federal exemptions cover a wide range of property, including:

Equity in your home (homestead exemption)

Motor vehicles

Income and wages

Jewelry

Household goods and furnishings

Medical aids and equipment

Tools of your trade

Life insurance policy interest

Domestic support payments

Social Security, unemployment, veteran’s, disability, or public benefits

Personal injury, crime victim, or wrongful death awards

Retirement accounts

“Wildcard” exemption

In New York and several other states, you can choose between applying the federal set of exemptions or applying exemptions provided by state law. In some cases, a specific federal exemption may be more generous than a state exemption, and vice versa. You should have a knowledgeable bankruptcy lawyer review the possibilities for you to use to determine the most beneficial decision in your case.

Certain states require you to use the state law exemptions. The following states give you the option to select the state or federal exemptions: Alaska, Arkansas, Connecticut, District of Columbia, Hawaii, Kentucky, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Washington, and Wisconsin.

The federal exemptions apply the same to bankruptcy cases in any jurisdiction. However, state exemptions can vary significantly from one state to the next. Each state can make its own rules and, unfortunately, you cannot simply choose where you file your bankruptcy to benefit from more lenient exemptions. Instead, you must file your petition in a judicial district where you live, where you own a business, or where you keep most of your assets. For many people, they only have one option where to file their case and, therefore, do not have the option of using out-of-state exemptions.

New York Exemptions

New York law does have an extensive list of exemptions that in-state bankruptcy filers can apply. These state-specific exemptions include:

$170,825 homestead exemption for the counties of New York, Bronx, Queens, Kings, Nassau, Richmond, Suffolk, Putnam, Westchester, and Rockland. Married couples filing together can double this exemption.

Security deposits for utilities or housing

Necessary medical devices

Up to $11,025 in household goods, including clothes, furniture, kitchenware, cell phones, electronics, books, photos, and more

As much as $4,425 of equity in a motor vehicle

As much as $3,300 in tools of your trade

90 percent of earned wages

Alimony and child support

Retirement accounts and benefits

If you are not using the homestead exemption, $5,525 in cash

These are only some of the exemptions that New York law makes available. You should always consult with a lawyer who can review all possible exemptions and provide advice. For example, if you have home equity, it may be more beneficial to use New York exemptions, since the federal homestead exemption is only $23,675. However, if you do not have substantial home equity, the federal exemptions may protect more property than state exemptions. It depends on your specific circumstances and you should get the advice of a bankruptcy attorney.

The exemptions can vary significantly from state to state. For example, right next door in New Jersey, there is no motor vehicle exemption and you can exempt only $1,000 in household goods. In Kentucky, the homestead exemption is only $5,000 and you can only keep $300 in tools of your trade.

A bankruptcy case can be substantially different depending on the set of exemptions that are available to you. For some filers, there may only be one option—the exemptions set by the state of their residence. It can seem unfair that you lose property that someone in a neighboring state may get to retain. However, each state should consider the trends of its population and economy when setting exemptions, and set exemptions that reflect the needs of its residents.

Your bankruptcy attorney can help you know your options for filing bankruptcy, including in which court you should file. Determining where to file bankruptcy is an important decision, as the wrong court may dismiss your case or you may not have access to the best possible exemptions. Where you file can set the right or wrong tone for your bankruptcy case. You may have options, such as when you live in one state and own a company with a principal place of business in another state. An attorney can help determine which jurisdiction is best for your case.

Both Chapter 7 and Chapter 13 bankruptcy cases can help turn your life around. Even though some people do lose some property, our lawyers help our clients apply exemptions to protect as much of their property and assets as possible. We are well-versed in both federal and state laws as they apply to bankruptcy including the options for exemptions in New York.

Bankruptcy can help you gain control of your finances, but you should never take it lightly. Bankruptcy is not right in every situation. You should contact a skilled lawyer at the Law Offices of Ronald D. Weiss to discuss your rights and options. We regularly help people in and around the Long Island area with foreclosure defense and bankruptcy cases. Please (631) 479-2455 or contact us online for a free consultation today.