New York Bankruptcy Exemptions and Law

If you’re like other New Yorkers struggling to pay your bills, you may have considered filing bankruptcy. Depending on which type of bankruptcy you pursue, you can either get rid of your debts or agree to a long-term repayment plan.

Before you decide whether to file Chapter 7 bankruptcy or a Chapter 13 reorganization case, you should familiarize yourself with New York bankruptcy laws, including the New York bankruptcy exemptions. This way, you can fit your bankruptcy filing to your specific financial situation.

This article explains the bankruptcy laws in New York State. We will also discuss the state’s bankruptcy exemptions and how they compare to the federal exemptions. If you’re thinking of filing bankruptcy and aren’t sure what steps to take, contact a New York bankruptcy attorney.

Determining the Type of Bankruptcy To File

To qualify for bankruptcy, you must do one of two things. If you want to pursue a Chapter 7 bankruptcy case, you must be able to pass the “means test.” This test determines whether your income is below the state median income.

If your best option is a Chapter 13 bankruptcy case, you must demonstrate that you have sufficient regular income to make the monthly payments in your Chapter 13 plan. You must also complete the necessary bankruptcy forms.

Before you decide which chapter to file, review the New York bankruptcy exemptions. This will help you determine which assets you can keep if you opt for a Chapter 7. These exemptions may also dictate whether you pursue a Chapter 13.

New York Bankruptcy Law and Bankruptcy Exemptions

Bankruptcy cases are governed by the United States Bankruptcy Code and take place in federal bankruptcy court. Most state bankruptcy laws, including those in New York, mirror the federal bankruptcy laws. There are some key differences.

Bankruptcy exemptions protect your assets from sale, liquidation, or seizure. There are federal exemptions and state exemptions. Most states allow bankruptcy filers to choose between the two.

New York is one of the states that allow debtors to select from the state or federal bankruptcy exemptions. You must pick one or the other and indicate on your bankruptcy petition which set of exemptions you are claiming.

Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy in New York

Regardless of where you live, the two most common types of bankruptcy are Chapter 7 (personal liquidation bankruptcy) and Chapter 13 (individual reorganization bankruptcy). Since the goal of filing bankruptcy is to get a fresh start, choosing the correct type of bankruptcy to file is extremely important.

Let’s take a closer look at the two main types of bankruptcy filings.

Chapter 7 Bankruptcy

Known as a “liquidation bankruptcy,” you can file under Chapter 7 if your household income falls below the median income for your state. In this type of bankruptcy, you surrender your non-exempt assets to a bankruptcy trustee who will sell them to repay your creditors. In a Chapter 7 case, you can use exemptions to protect some of your assets. In return for giving up your non-exempt property, you will exit bankruptcy debt-free.

Chapter 13 Bankruptcy

This is sometimes known as a “reorganization bankruptcy” because it allows individuals to rework their debt. Under a new plan, you’ll pay off your debts over a three-to-five-year period. You make your Chapter 13 monthly payments under a court-approved repayment plan that may also relieve you of some of your debt. The most significant benefit of filing Chapter 13 is that, in most cases, you can keep your home.

Which Debts Can You Include in Your New York Bankruptcy Case?

Most of the debts you can include are unsecured, like credit cards and medical expenses. There are certain types of debt, such as student loans, that you can’t include in a Chapter 7 bankruptcy. Other types of non-dischargeable debts include:

• Domestic support obligations (child support, alimony, etc.)
• Luxury goods and services
• Certain taxes (taxes owed from returns you filed within two years of filing bankruptcy, penalties for tax fraud or tax evasion, and taxes the IRS assessed within 240 days of your bankruptcy petition)
• Criminal fines and penalties
• Debts arising out of DUI-related personal injury cases
• Debts arising out of misconduct or fraud

Some of your assets are automatically exempt from seizure, sale, or surrender in bankruptcy. Some of these include:

• Pension and retirement funds
• Annuities
• Veterans’ benefits
• Social Security benefits
• Public assistance

If you’re worried that certain debts won’t qualify for discharge in your case, talk to a New York bankruptcy lawyer before you file your petition.

One important benefit of both types of bankruptcy is the automatic stay issued when you file. The stay will stop collection by your creditors, including court cases and foreclosures. It gives you some time so that you can resolve your debt problems through the bankruptcy process without worrying about being harassed by your creditors.

Am I Eligible To File Bankruptcy in New York?

To qualify for Chapter 7 bankruptcy in New York, you must pass something called the “means test.” As long as your household income is below the median household income in New York State, you qualify.

For a Chapter 13 bankruptcy case, you must meet other criteria. First, you must have a regular income that is sufficient to make payments under a Chapter 13 repayment plan. You must also meet the maximum limits for secured and unsecured debt as required by federal law. As of 2026, the maximum allowable debt for purposes of filing Chapter 13 is $526,700 for unsecured debt and $1,580,125 for secured debt. Your total debt (for both categories) must be below these limits for the trustee to approve your bankruptcy petition.

At some point during your bankruptcy proceedings, there will be something called the “Meeting of Creditors.” During this meeting, creditors can object to the inclusion of their debts.

How Do Bankruptcy Exemptions Work?

One of the primary benefits of filing for personal bankruptcy is that it allows you to start over with a clean slate. While there’s always the possibility that you may have to sell or surrender certain assets as part of your bankruptcy, there are bankruptcy exemptions that can help you keep your prized possessions.

As far as property ownership is concerned in bankruptcy, the most important thing is equity. If you have no equity in your home, motor vehicle, or other property, then the trustee would have no reason to sell it. With zero equity, there would be no proceeds from the sale to pay creditors.

It’s different when a property does have equity. For example, if you have $50,000 in equity in your house, the bankruptcy trustee may sell it to help pay your debts. If you have more than enough equity to pay all your debts, the trustee will sell it, and you will receive the remaining proceeds once they pay your creditors.

Bankruptcy exemptions can help you keep your home and other property. These protect a certain amount of equity debtors have in their assets. In some cases, the exemption is large enough to protect your property entirely. Other times, it protects enough of your asset so that it’s not worth selling.

Every state has its own set of bankruptcy exemptions, including New York. State exemptions are often different from the federal bankruptcy exemptions. New York allows you to choose the set that best fits your filing.

When filing your bankruptcy petition, you must indicate whether you wish to claim the state exemptions or the federal exemptions. A New York bankruptcy lawyer can help you decide which set of exemptions benefits you the most.

New York Bankruptcy Exemptions

New York exemptions can vary by county. Comparing those offered by your county with the federal options can help ensure you get the most help to retain your primary assets. This includes real property like your primary dwelling.

Homestead Exemption

In New York, the amount of your homestead exemption depends on the county in which you live. The specific exemption amounts are as follows:

$204,825 for the following counties:

• Kings (Brooklyn)
• Queens
• New York (Manhattan)
• Bronx
• Richmond (Staten Island)
• Rockland
• Suffolk
• Nassau
• Westchester
• Putnam County

$170,700 for the following counties:

• Dutchess
• Albany
• Columbia
• Orange
• Saratoga
• Ulster

All other counties offer a homestead exemption of $136,975.

These homestead limits are as of 2026. The amounts change every three years. Make sure you ask your New York bankruptcy attorney what the current homestead exemption is. This will help you decide which chapter to file and whether to claim the federal or state exemptions in your bankruptcy case.

Married couples enjoy double the amount of the above bankruptcy exemptions. For example, if you live in Westchester County, you and your spouse can claim up to $409,650. If you live in any of the counties not specifically listed above, your total exemption is $341,400.

Motor Vehicle Exemption

Under New York law, debtors can protect up to $5,500 of equity in their motor vehicle. This amount applies regardless of your age or marital status. If you are disabled and you have equipped your vehicle for the use of a disabled person, the exemption increases to $13,625.

Wildcard Exemption

New York does not have a separate wildcard exemption. You can exempt up to $10,000 in personal property. This can be applied any way you see fit, as long as you don’t exceed the maximum exemption for any given item.

Tools of the Trade Exemption

New York offers an exemption of up to $4,075 for any tools of the trade you require for your job. This extends to any tools, equipment, and supplies you need to maintain your company or employment.

Other Personal Property Exemptions

New York law doesn’t have a separate wildcard exemption in bankruptcy. However, you can protect up to $10,000 in personal property. This includes household goods, jewelry, electronics, or any other personal property you like. Any property not protected by an exemption is eligible for sale by the trustee, who will distribute the proceeds to creditors to pay your debts.

Disclaimer: State and federal laws change frequently due to new legislation, higher court rulings, and other means. While FindLaw strives to provide the most current information, consult a local bankruptcy attorney or conduct additional legal research to verify your state laws.

Seek Legal Advice Before You File Bankruptcy in New York

Deciding to file bankruptcy is not easy. For most people, it’s a last resort. Even if you don’t have many assets, your bankruptcy case will likely be complex. If you aren’t familiar with the bankruptcy laws, you could easily risk having the court dismiss your bankruptcy petition.

One way to ensure that you file your case properly and achieve the debt relief you’re so desperately seeking is to hire an experienced New York bankruptcy lawyer. They know the law and can also help you take advantage of bankruptcy exemptions.