Filing for Bankruptcy and Keeping Your Property in New York

Filing for bankruptcy can be a daunting process, particularly when you're concerned about keeping your property. In New York, there are specific laws and provisions designed to help individuals navigate bankruptcy while preserving their assets. Understanding these provisions is crucial for anyone considering bankruptcy.

New York's bankruptcy process generally falls under Chapter 7 and Chapter 13 of the U.S. Bankruptcy Code. Chapter 7 bankruptcy involves liquidating non-exempt assets to pay creditors, while Chapter 13 allows individuals to reorganize their debts and keep their property by creating a repayment plan.

Chapter 7 Bankruptcy and Property Exemptions

When filing for Chapter 7 bankruptcy in New York, it's important to be aware of the state’s exemptions that allow you to keep certain assets. New York allows individuals to exempt a portion of their equity in their primary residence, personal property, retirement accounts, and more.

One of the most significant exemptions is the home equity exemption, which can protect up to $170,825 of equity in your primary residence as of 2023. For married couples filing jointly, this number may double, providing substantial protection for your home. Other personal property exemptions include up to $1,100 for personal belongings, $2,400 for a vehicle, and exemptions for personal injury awards and certain retirement accounts.

Chapter 13 Bankruptcy: A Strategy to Keep Property

If you want to keep your property and have a steady income, Chapter 13 may be the better option. This type of bankruptcy allows individuals to create a payment plan that lasts three to five years, during which they can pay off debts while retaining their property. The advantage of Chapter 13 is that it can prevent foreclosure and repossession, allowing you to catch up on missed payments over time.

To qualify for Chapter 13, you must have a regular income and meet specific debt limits. The repayment plan must be approved by the court, but as long as you adhere to it, you can keep your home, vehicle, and other assets from being sold off.

Pre-Bankruptcy Planning

Pre-bankruptcy planning can also play a vital role in protecting your property. This involves reviewing your assets, determining which ones are exempt, and strategically managing your debts. Consulting with a bankruptcy attorney can help you make informed decisions about the best type of bankruptcy for your situation.

Additionally, it is crucial to avoid transferring assets or hiding them before filing, as such actions can lead to complications or even denial of your bankruptcy petition.

The Impact of Bankruptcy on Mortgage and Lease Agreements

Filing for bankruptcy can have a profound impact on your mortgage and lease agreements. While bankruptcy can provide an automatic stay, halting foreclosure actions, it’s essential to understand how this may affect your obligations moving forward. In most cases, debts such as mortgages need to continue being paid, especially if you wish to retain your property.

If you’re in a default situation, Chapter 13 can serve as a lifeline by allowing you to reorganize these debts and keep your property. On the other hand, your tenancy situation may require additional consideration if you're renting. Under the Bankruptcy Code, landlords generally cannot evict tenants solely for filing bankruptcy, but previous debts may still become liabilities.

Conclusion: Navigating Bankruptcy Law in New York

Navigating bankruptcy law in New York can be complex, especially when it comes to protecting your property. Whether you opt for Chapter 7 or Chapter 13, understanding your rights and the specific exemptions available is essential. Working with a knowledgeable bankruptcy attorney can help you devise a strategy that maximizes your ability to keep your property during the bankruptcy process.

Considering all factors, filing for bankruptcy provides an opportunity for a fresh start while allowing you to retain your home and other essential assets. By being informed and prepared, you can navigate this challenging time successfully.