Perhaps one of the most worrisome things about filing for bankruptcy is thinking you will lose all your possessions. This is not necessarily the case. Even if you file for Chapter 7 bankruptcy, you may be able to keep many assets.
Certain items are exempt from being sold
Both federal and New York law allows people who file for bankruptcy to exempt certain assets. That means this property cannot be sold to pay off your debts. However, only certain items are exempted and only up to certain thresholds. If you have lived in New York for at least two years, you can claim the New York or federal bankruptcy exemptions.
Your home may determine your exemptions
Your home usually determines which exemptions will benefit you more. A home worth more than what you owe on it has equity. If you do not own a home or have very little equity in your home, you should use the Federal exemption limits. Less than $10,000 in equity is considered a small amount of equity. If your home is worth $500,000 and you owe $250,000 on your mortgage, you have $50,000 in equity.
In New York City as well as Nassau, Suffolk, Rockland, Westchester and Putnam counties, you can exempt up to $165,550 in equity on your home. If you are married the amount doubles, so you can exempt $331,000 in equity. In Dutchess, Albany, Columbia, Orange, Saratoga and Ulster counties, you can exempt $137,950 in home equity. For the rest of New York state, the home exemption limit is $82,775. If the equity in your home does not exceed these limits, it will not be sold to pay off your debts.
You can protect other assets
For motor vehicles, you can exempt up to $4,425 in equity. You can also protect up to $11,025 in household goods and clothing. This may include jewelry, art, books, appliances and other goods. Some cash may also be exempt from confiscation by the bankruptcy trustee.
While the exemptions are numerous, understanding what can be included is a complex process. If you are concerned about specific assets, you may want to contact a bankruptcy attorney. An attorney can go over your assets and walk you through the bankruptcy process.