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Governor's Approval memo: Exemption update law

Governor Patterson signed the bankruptcy and judgment debtor exemption update bill, A7034, on December 22 (Note: the press release for the signing was issued the next day, Dec. 23.)  The law is now known as Chapter 568 of the 2010 session Laws of New York State. Below is the Governor's official approval memo #38.  The governor noted in his support that an amendment to exclude New York and its municipalities from the judgment debtor car exemption should be amended in the next legislature.  I also note that the approval memo misstates the new homestead exemption.  It is actually $75,000, $100,000 and $150,000.

APPROVAL MEMORANDUM - No. 38 Chapter 568

MEMORANDUM filed with Senate Bill Number 7034-A, entitled:

"AN ACT to amend the civil practice law and rules, in relation to
increasing the property values which are exempt from the satis-
faction of a money judgment; and to amend the debtor and credi-
tor law, in relation to increasing the exemptions in bankruptcy"


This bill would amend Civil Practice Law and Rules (CPLR) Sections
5205(a) and 5206 to increase the value of certain property that is
exempt from the satisfaction of a money judgment, and would amend Debtor
and Creditor Law (DCL) Sections 282(l) and 283 to increase the value of
property that is exempt from the estate of a debtor in bankruptcy.
Among other things, the bill would create a new exemption from the
satisfaction of a money judgment for a vehicle not exceeding $4,000
above the debtor's liens and encumbrances ($10,000 for a vehicle
equipped for use by a disabled person) and raise the bankruptcy
exemption accordingly. It would also increase the homestead exemption
from $50,000 to either $75,000, $125,000 or $250,000, depending upon the
county in which the homestead is located. In addition, the bill would
provide for a new cost of living adjustment for each of the CPLR and DCL
exemptions, to be determined and published every three years by the New
York State Superintendent of Banks. Finally, the bill would permit a
debtor in bankruptcy to choose between claiming the set of exemptions
authorized in the DCL or the set of exemptions authorized in the United
States Bankruptcy Code.

In short, this bill would provide a much-needed update to the law of
exemptions in New York. The purpose of such exemptions is to permit
judgment debtors and debtors in bankruptcy to retain a modest amount of
personal property and equity in their homes so that they can continue to
maintain their lives, and to protect them from becoming homeless, unem-
ployed, or otherwise dependent on the State. Many provisions of New
York's law are antiquated or have not been amended for decades, such as
the "tools of the trade" exemption under CPLR Section 5205(a)(7) for
items necessary for carrying out the debtor's trade, which is currently
only $600. A reconsideration of exemptions law is particularly warranted
in these difficult economic times, when an increasing number of individ-
uals find themselves in dire financial straits. For these reasons, I am
proud to sign this bill into law.

Despite may support for the great majority of what this bill would
achieve, I must address a problem in one of the bill's provisions raised
by New York City and the New York State Conference of Mayors and Munici-
pal Officials. Specifically, the bill creates a new $4,000 exemption
for motor vehicles outside the context of bankruptcy, and thereby may
significantly reduce the ability of the State and municipalities to
collect delinquent debts, such as unpaid parking tickets. A bill to
address this issue (S.8451/A.11677) passed the Senate this August, but
did not come to a vote in the Assembly. I note that some have argued
that current law could be interpreted to exclude judgments docketable by
municipal agencies from the scope of this law, but I agree with New York
City that an amendment should be enacted to resolve definitively the
issue. My staff has spoken to the Assembly sponsor of this legislation
and to many of the advocacy groups whose fine work on this bill brought

it to fruition. They have all strongly committed to seeing this amend-
ment enacted, so as to address the very legitimate concerns expressed by
municipal officials. I know of no obstacle or opposition to such
passage, and I strongly urge the next Legislature to pass such a bill as
quickly as possible. Given the importance of this legislation to so many
struggling New Yorkers, however, I cannot allow this flaw to impede its

The bill is approved. (signed) DAVID A. PATERSON

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