When filing bankruptcy in New York, you get a choice of using the either the New York exemption statutes or the Federal ones located in Section 522(d) of the Bankruptcy Code.
If you’re looking to protect your real estate, you cannot use any exemption unless it is your homestead – that is, the place you actually live. Investment properties can’t be protected, at least not under the homestead provisions.
For homeowners in New York who are filing bankruptcy, the state exemptions provide for far greater protection of your primary residence.
Under the federal scheme real property, including co-op or mobile home, or a burial plot may be exempted only up to $21,625 in equity.
The New York homestead exemption depends upon where the property is located. When you file for bankruptcy in New York and own a home, you can protect a house, condominium or cooperative unit, or mobile home with equity of up to:
- $150,000 if the property is located in Brooklyn, Queens, Manhattan, Bronx, Staten Island, Long Island, Rockland, Westchester and Putnam counties;
- $125,000 if the property is located in the counties of Dutchess, Albany, Columbia, Orange, Saratoga or Ulster; and
- $75,000 if the property is located in any other county in New York State.
If you have a mortgage you must keep paying it or the mortgage holder can foreclose on the home.
It’s important to remember that the homestead exemption may be used only on your primary residence – so if you own multiple properties you can use it in only the one in which you live. Similarly, you cannot claim a homestead exemption on a property that is purely an investment or rental property.
If you live in the property and rent the other part out, then it is still a primary residence and you may use the homestead exemption.
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