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New York law protects struggling Rockland residents

This blog has previously discussed how, during the bankruptcy process, a Rockland resident can choose whether he or she wants to take advantage of either the state exemptions or federal exemptions set out in the bankruptcy code.

As a reminder, an exemption is a protection, provided for in the law, that allows a debtor to take a piece of property off the table when it comes to creditors trying to collect debts. The idea is that by allowing a debtor to keep some, but not all, of his or her property, creditors can get paid without leaving a person absolutely penniless and unable to support him or herself.

It is important to remember that New York's exemptions can be claimed outside of a bankruptcy proceeding as well, although the process might be a bit more complicated. In any event though, New York residents can keep important government benefits like workers' compensation payments, disability and unemployment. Child support payments are also exempt from garnishment. While New Yorkers cannot save all of their income from garnishment, they can keep a portion of it from the debt collectors.

Additionally, most retirement benefits, such as 401Ks and pensions, are exempt from collection. Even certain trust funds are, for the most part, exempt from collection in New York. Unless there is more than $4,000 in equity, that is the difference between what an item is worth and what is owed on that item, Rockland residents can also keep a car. Other personal property, like most furniture, medical equipment and even some electronics, are exempt.

While this post serves as an overview of New York's state exemptions, the reality is that exemptions can involve interpreting complicated laws and being able to see the big picture, particularly when it comes to choosing whether to use federal or state exemptions during bankruptcy.

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