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
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.