In an earlier post, I discussed the benefits that the increase in the homestead exemption will have for homeowners – but what about those who do not own a home? Do not fret – there are also benefits for non-homeowners as well.
In any discussion of exemptions for those who file bankruptcy in New York, there has always been a major tradeoff in what you are allowed to protect when you file bankruptcy – namely, if you are required to claim the homestead exemption, you could not claim any exemption for cash or cash equivalent assets such as checking or savings accounts or the right to receive a tax refund.
Effective January 22, 2011, the landscape also changes for non-homeowners who file for bankruptcy protection as well as for homeowners who unfortunately have little or no equity in their homes, and would not be required to use the homestead exemption. The major changes impact an individual’s ability to protect certain personal property, including cash and automobiles. The following are the major changes scheduled to take effect:
Cash Exemption – increased from $2,500.00 to $5,000.00
Auto Exemption – increased from $2,400.00 to $4,000.00
Tools of the Trade – increased from $600.00 to $3,000.00
Aggregate Personal Property exemption increased from $5,000.00 to $10,000.00
While these increases may not seem significant at first blush, as a regular bankruptcy practitioner over the past 20 years, they will have a major impact to the facilitation of the Chapter 7 bankruptcy process in that Interim Trustees should be closing bankruptcy cases more quickly instead of keeping cases open to administer small recoveries for creditors, such as those which would have resulted from tax refunds or the value of late model automobiles.
If you have been debating whether to file bankruptcy, you owe it to yourself to contact our offices at (516) 268-0122 and schedule a free, non-obligation consultation in which we can assess your current situation and determine whether you may qualify under the new exemption guidelines.