If I file bankruptcy, can I keep my house?

New York Homestead Exemption

This is one of the biggest concerns that clients have asked our attorneys. People don't want to risk losing their house when filing for bankruptcy. Upon filing a chapter 7 bankruptcy, any unexempt assets belong to the estate and are under control by the Trustee. As such, unexempt equity in real property could be subject to liquidation by the bankruptcy trustee and sold for the benefit of repaying creditors. Before filing for bankruptcy, a homeowner will want to understand the applicable exemptions and whether their home will be safe from being sold.

Our office has been very successful in helping client's keep their primary residence in the bankruptcy process. Let's walk through a sample scenario:

A person accrues $30,000 in debt on several credit cards, but is in good standing on their mortgage. This individual would like to discharge the credit card debt in a chapter 7 bankruptcy, as long as his home would not be in danger. The home has an outstanding mortgage of $500,000 and is located in Brooklyn, NY. Upon conducting due diligence, it is determined that the market value of the home is $625,000, leaving $125,000 in owners equity.

If filing a bankruptcy using New York State Exemptions, the New York Homestead Exemption allows an individual owner of a primary residence in Brooklyn to exempt up to $150,000 in property equity*. In this limited scenario, the property should be exempt from liquidation, and safe from being sold by the Trustee.

The above example can only be used in reference to someone that is making regular payments on their mortgage.This information does not apply to a person that is not making payments on their mortgage and is in pre-forclosure or foreclosure status.

The answer as to whether you can specifically keep your home would require an analysis of your situation by an attorney. If you live in New York City, contact us for a free evaluation to determine whether Chapter 7 bankruptcy is the right option for you.

Homestead Exemptions by County in New York*

Tip 1 - Married? Married couples are permitted to each take the full homestead exemptions for a property that is owned jointly in New York. This can make a huge difference in protecting the real estate. For example, a married couple that owns a home in Brooklyn may be able to exempt up to $300,00 in real estate equity! Learn how our lawyers can assist you with filing a bankruptcy in Brooklyn.

Tip 2 - State or Federal Exemptions? Choose the exemption system that works best for your overall bankruptcy. The Federal Homestead exemption allows $22,975*, while the New York exemptions are listed below and are considerably higher. The Federal laws do provide different automobile, cash, wildcard, and other exemptions that may be pertinent to protecting assets other then the primary residence. Be sure to take into account all assets when selecting your exemption system.

• $150,000 Homestead Exemption
  • Kings County (Brooklyn)
  • Queens County
  • New York County (Manhattan)
  • Bronx County
  • Richmond County
  • Nassau & Suffolk County (Long Island)
  • Rockland, Westchester, and Putnam Counties
• $125,000 Homestead Exemption
  • Dutchess County
  • Albany County
  • Columbia County
  • Orange County
  • Saratoga County
  • Ulster County
• $75,000 Homestead Exemption
  • If the homestead is located in another county in New York

*Exemption amount valid on 10/14/2015, subject to change over time.