NEW YORK, NY - On December 23, 2010, outgoing Governor David Paterson signed major new legislation increasing the New York homestead exemption and other New York property exemptions. The law makes New York more competitive with other states. A chart of the major changes is set forth below.

Under this amendment to current law, the homestead exemption will increase as follows:

$150,000 for New York, Bronx, Brooklyn, Richmond, Queens, Nassau, Suffolk, Westchester, Rockland and Putnam Counties;

$125,000 for Dutchess and Orange Counties; and

$75,000 for Sullivan and all other counties.

The exemption is doubled in cases with joint debtors. Downstate New York married debtors will now be able to protect $300,000 in homestead equity from trustees and judgment creditors.

There are increases to other exemptions as well. The automobile exemption increases from $2,400 to $4,000, or $10,000 if the vehicle is equipped for use by a disabled person.

Pursuant to this amendment, New York debtors will now be able to choose either New York property exemptions OR the federal exemptions listed in section 522(d) of the Bankruptcy Code.

Section 522(b)(1) prohibits-in a joint case-one spouse from selecting state exemptions while the other spouse selects federal exemptions. In other words, joint debtors must both select either state OR Bankruptcy Code exemptions. They may not be split.

The amendment takes effect on January 22, 2011. However, it is unclear whether the amendment applies to pending cases. It is likely not to be retroactive.

EXISTING New York Bankruptcy Exemptions

AMENDED New York Bankruptcy Exemptions

Homestead Exemption (note: this may be doubled for married couples filing jointly who own the marital residence together)

$50,000

Homestead Exemption (note: this may be doubled for married couples filing jointly who own the marital residence together)

$150,000 for property in New York downstate counties, New York, Nassau, Suffolk, Kings, Queens, Bronx, Richmond, Rockland, Westchester and Putnam)

$125,000 for property in counties of Dutchess, Albany, Columbia, Orange, Saratoga and Ulster

$75,000 for all other New York counties

Motor Vehicle

$2,400

Motor Vehicle

$4,000

 

If equipped for use by disabled person (new category)

$10,000

Cash Exemption if Homestead Exemption Taken

None

Cash Exemption if Homestead Exemption Taken

$1,000. (Note: May be used for personal property. However, Bankruptcy Code Exemption is more generous.)

Jewelry and Art

Wedding ring

Watch worth up to $35

Jewelry and Art

Wedding ring

Watch, jewelry and art worth up to a total of $1,000

Tools of Trade (Working Tools and Necessary Equipment to Carry on One's Business)

$600

Tools of Trade (these are the working tools and implements that are necessary to carry on one's business)

$3,000

Aggregate Individual Exemption for Cash, Household Goods and Clothing

$5,000

Aggregate Individual Exemption for Cash, Household Goods and Clothing

$10,000

This amendment significantly changes the landscape of possibilities for individuals, couples, or even sole proprietors considering personal bankruptcy in New York. To review your individual options, call Richard Weltman or Michael Moskowitz to arrange a meeting.

Michael L. Moskowitz and Richard E. Weltman are members of Weltman & Moskowitz, LLP, a business - oriented law firm with offices in New York and New Jersey. The firm handles matters involving bankruptcy and creditor's rights, bankruptcy and business litigation, technology law, real estate, dispute resolution and many types of commercial disputes, buy-sell agreements, business divorce and transactional matters. They may be reached at 212.684.7800 or 201.794.7500, or by e-mail to Michael L. Moskowitz or Richard E. Weltman .