New York Homestead Laws

The idea of losing their home can give most people pause when deciding whether to file bankruptcy. While it’s true that a bankruptcy trustee can sell your primary dwelling to pay creditors, you may be able to take advantage of something called a “homestead exemption.”

The homestead exemption protects a certain amount of equity in a debtor’s home. New York offers debtors a rather high homestead exemption, which can range anywhere from $102,400 to $204,825, depending on where you live.

This article explains how the homestead exemption works and what it can protect in your bankruptcy case. It also discusses how the exemption applies in a Chapter 7 bankruptcy case versus a Chapter 13 bankruptcy case.

If you’re considering filing bankruptcy or are already in the middle of bankruptcy proceedings and are worried about losing your home, consider contacting an experienced New York bankruptcy attorney. A skilled attorney will help you claim your homestead exemption and ensure that you file your bankruptcy properly.

What Is the Homestead Exemption in Bankruptcy?

People who file Chapter 7 bankruptcy look to liquidate their assets to pay off their debts. Once the trustee does this, the bankruptcy court will discharge (wipe out) any remaining debts. When this happens, your creditors, including most judgment creditors, will be prohibited from pursuing further collection activity.

The homestead exemption is a part of bankruptcy law that allows debtors to protect some or all of the equity in their home. As long as the property is their principal residence, a debtor can claim this exemption.

There are two types of homestead exemptions: the federal homestead exemption and the state homestead exemption. When you claim this exemption, the trustee must protect the equity in your home, up to the amount of the exemption. If the equity is less than the homestead exemption amount, then your home is protected from sale, and the trustee cannot liquidate it to pay creditors.

If the equity exceeds the exemption, only the portion covered by the exemption is protected. In a Chapter 7 bankruptcy case, the trustee can sell your home, give you the amount afforded to you via the exemption, and use the rest of the money to pay creditors.

New York exemptions are much more generous than the federal exemption. Most New York debtors opt for the state exemptions rather than the federal protections.

The homestead exemption is available in both Chapter 7 and Chapter 13 bankruptcy. Since a Chapter 13 is a reorganization bankruptcy, you’ll likely be able to keep your home anyway. While the trustee won’t sell it to pay creditors, they’ll include any arrears you owe on your mortgage in your Chapter 13 repayment plan.

A homestead exemption is much more prominent in a Chapter 7 case. There’s a good chance the trustee will intend to sell your home to pay creditors. The homestead exemption protects a portion of your home equity, often blocking any sale.

Due to the high exemption amount in New York State, only people with hundreds of thousands of dollars in equity risk losing their home in bankruptcy.

New York State Homestead Protection Laws

Compared to the federal homestead exemption, New York’s homestead exemption is generous. Under federal law, the per-person homestead exemption is only $31,575 for single filers or $63,150 for spouses filing jointly.

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

• $204,825 for these counties:
  • Kings (Brooklyn)
  • Queens (Queens)
  • New York (Manhattan)
  • Bronx
  • Richmond (Staten Island)
  • Rockland
  • Suffolk
  • Nassau
  • Westchester
  • Putnam County
• $170,700 for the following counties:
  • Counties of Dutchess
  • Albany
  • Columbia
  • Orange
  • Saratoga
  • Ulster

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

The government increases the amounts every three years. The next increase is scheduled for April 1, 2027.

Types of Real Property Are Protected by the Homestead Exemption

When filing bankruptcy, it’s common to wonder what types of real property are covered by the homestead exemption. Homeowners can protect most types of property under both the federal homestead exemption and the New York homestead exemption.

In general, property owners can protect the following types of real estate in their bankruptcy:

• Single-family homestead
• Condominiums
• Co-ops
• Mobile homes
• Trailers (permanently affixed as primary residence)

You’ll need a current appraisal to determine the exact property value of your home. Your bankruptcy attorney will have to attach a copy of this document with your bankruptcy petition.

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, contact a local bankruptcy attorney to confirm the current bankruptcy laws.

Seek Legal Advice From a New York Bankruptcy Lawyer

If you want to file bankruptcy but are afraid of losing your home, contact a local bankruptcy attorney for help. New York law provides a generous homestead exemption, so there’s a good chance you’ll be able to keep your home.

An experienced New York State bankruptcy lawyer will review your case and advise you on how best to proceed. Bankruptcy is meant to give you the fresh start you need, and there’s a good chance the New York homestead exemption will protect your primary residence. The best way to make sure this happens is to seek legal advice from a lawyer with vast experience handling bankruptcy cases.