What are the Federal Exemptions?
Federal exemptions are just that, they are exemptions that the federal government allows you to claim. Bankruptcy is a product of federal legislation. States are not obligated to adopt the federal exemptions. New York state just recently adopted the federal exemptions. NY also allows a debtor to choose the NY State exemptions instead. Which are better? and which should I pick?
Depends on your assets. If you have a home with over $22,975 in equity, then the NY State exemptions are more appealing. NY state allows you to protect up to 75k in equity in a home. Down state the amount is $125,000. Whereas Federal exemptions only allow $22,975 in home equity. This exemption is per debtor. In the event that you file with your spouse, then these amounts double.
Overall, the Federal exemptions are more generous. If you have a vehicle that is worth 10k then by claiming the NYS exemptions, you could only exempt or protect $4,000 leaving $6,000 exposed to the chapter 7 trustee. You would lose your car under this scenario unless you made a deal with the chapter 7 trustee. Better to claim the $3,675 exemption for a car under the federal exemptions and then use your wild card exemption to protect the remaining $6,325.
All depends on your assets. For example, household goods and furnishings are exempted under federal law to $12,250 whereas NYS law is unlimited amount. Personal injury case in NYS is protected up to $7,500 whereas the federal personal injury amount you can protect is $12,250.
I hope this helps. Bottom line is that you need to consult with a seasoned attorney who is well versed in bankruptcy law and procedures. If you need assistance, please call or email me.
/s/ Mark Lewis, Esq.