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  • Writer's pictureSubhan Tariq, Esq


When you choose to file for chapter 7 bankruptcy, it is imperative that you know about federal and state bankruptcy exemptions. Exemptions from bankruptcy are essential because they let you keep ownership of specific property. Some of your property might not be sold when you file for Chapter 7 bankruptcy, depending on where you live and on your marital status.

Chapter 7 bankruptcy is the most common type of bankruptcy, which allows you to get a fresh start after liquidating all your assets. However, the last thing a debtor wants is to lose his most cherished assets, such as his home, retirement account, or car. With exemptions, you may be able to keep the certain essential property.

If your assets are equal to or less than the state or federal bankruptcy exemption threshold, they are excluded. If your assets are more than the state or federal bankruptcy exemption limit, they are not exempt. Under the New York bankruptcy law, you get to choose between state and federal exemptions.

State vs Federal Exemption

Homestead Exemption:

If most of your equitable value is in your home, condominium, co-op or mobile home, you can protect it. Under state exemption, you can keep your place of residence as long as its equity is up to $179,950 if you live in Kings, Queens, New York, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester, and Putnam counties; $149,975 if you live in Dutchess, Albany, Columbia, Orange, Saratoga, and Ulster counties, and $89,975 in all remaining counties. Under the federal exemption, your home must value up to $25,150 if you are one person and if you are a married couple who jointly own the home, it cannot value at more than $50,300.

Motor Vehicle Exemption:

You can exempt the equity in one motor vehicle if it is valued up to $4,825 or up to $11,975 if the vehicle is equipped for use by a disabled debtor under state exemption. Federal exemptions cover your car up to $4,000.

Wildcard Exemption:

Under wildcard exemption, you can add a limited amount of unused portion of an exempted asset to your wildcard exemption if you do not require the entire amount of the asset. For instance, if you don't use the homestead exemption, you can use the wildcard exemption to safeguard any non-real estate personal property you want as well as cash up to a value of $1,175 under the state exemption. Under the federal exemption, you can use up to $1,225 of the unused homestead exemption.

Tools of Trade Exemption:

If your tools of the trade, i.e., everything a person needs to carry out their trade, including tools, books, uniforms, office furniture, farm equipment, cars, and boats (if you are a professional fisherman), account for a reasonable part of your equity and if their value is less than $10,000, state exemption laws will let you keep the tools. However, under the federal exemption, you can only keep them if their value is less than $2,525.

Retirement Account Exemption:

A wider range of retirement accounts are covered under state exemptions. Your tax-exempt and IRA accounts are the only ones covered by federal exemptions. However, state exemptions will safeguard your IRA and other retirement accounts, as well as those for volunteer ambulance and fireman services, teachers, public employees, and more. Therefore, if a sizable portion of your equity is in your retirement account, state exemptions may be preferred.

It is important that you choose the right bankruptcy exemption keeping in mind your situation and value of your assets and what will be suitable for you.

Contact us at to know more about bankruptcy exemption.



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