Benefits of the Wildcard Exemption in Chapter 7 Bankruptcy
You do not have to be flat broke to file Chapter 7 Bankruptcy. In fact, today you can retain more of your assets when filing Chapter 7, by electing to take advantage of the Federal “Wildcard” exemptions when you file New York Chapter 7 bankruptcy. Until recently, the Federal Exemptions were not available to New York residents.
Under New York Law, an individual filing Chapter 7 can only retain up to $5,000 of personal property, which includes only $2,500 in cash and securities. Any additional assets must be turned over to the Trustee, for distribution to creditors.
Now, a New Yorker can choose either the New York Exemptions or the Federal Exemptions when filing their Chapter 7 Petition. New York has a higher Homestead exemption, which is now $150,000 for a home owner.
But, if you do not own real estate, you should opt for the Federal Exemptions.
Under the Federal rules, you can apply up to 50% of the federal homestead exemption, which is $21,625 plus an additional $1,150 to shelter cash from your creditors. You cannot mix and match, you have to go with either New York or the Federal Rules. But, for many debtors, the Federal Rules provide more flexibility and may help one qualify for Chapter 7 bankruptcy.
Be sure to check out the full list of Exemptions before you file Chapter 7.
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