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New York Joining 20 other Non-opt out States / Jurisdictions

The new exemption update law will allow New York bankruptcy debtors the option of using the federal exemptions rather than just the state exemptions. New York 'opted out' of allowing bankruptcy debtors to use federal exemptions in 1982. By no longer opting out of the federal exemptions, New York joins twenty other states and jurisdictions that allow use of the federal exemption. Interestingly, every state adjoining New York, and every New England state other than Maine, has not opted out of the federal exemptions.

Bankruptcy attorneys may want to pay close attention to case law interpreting the federal exemptions arising out of non-opt out states.

List of states or other jurisdictions that allow bankruptcy debtors to use the federal exemptions:

District of Columbia
New Hampshire
New Jersey
New Mexico
New York
Puerto Rico
Rhode Island
Virgin Islands

Note that West Virginia has opted out, but the bankruptcy exemptions allowed debtors in West Virginia are virtually identical to the federal exemptions (though without the cost-of-living increases.)

Source: Bankruptcy Exemption Manual; West's Bankruptcy Series; 2010 edition.


It appears that the most important difference is with personal injury settlements, $20,000 vs. $7,000.

If you mean the biggest difference between the federal exemptions and the updated New York exemptions, the $21,625 federal personal injury exemption of sect. 522(d)(11)(D) is a significant difference for those cases. Note that the personal injury exemption, like all federal bankruptcy exemptions, has been updated from the original $20,000 figure by the bankruptcy code automatic cost-of-living adjustment feature.

But I suspect the feature in the federal exemptions which is most different from the state, and which may cause a considerable number of local cases to opt for the federal exemption, is the 'wild card' provision of 522(d)(5). In every case, this provision allows the debtor to exempt $1,150 of any property not otherwise exempted. More significantly, it allows a debtor with no homestead or with a homestead with modest equity to use half of the homestead exemption of 522(d)(1) as a wild card to exempt other property. The federal homestead exemption is modest - only $21,625. But for a debtor with no house, or less than around $10,000 in equity in their house, that debtor can exempt up to $10,812.50 (plus $1,150) in any other property - boat, second car, stock, tax refund, anything.

Bill Neild and I will be going over this in detail at the MCBA Exemption Law CLE January 18.

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Peter R. Scribner, Esq.
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