Written by Craig D. Robins, Esq.
When a consumer files for bankruptcy relief, the bankruptcy laws permit him or her to keep and protect certain assets. These laws are called exemption statutes.
There is a set of exemption provisions set forth in the Bankruptcy Code and they are called the Federal Exemptions. However, in 1978, Congress gave the legislature of each state, such as the state of New York, the ability to “opt out” of the federal exemptions.
This is because for almost 200 years, there has been an issue over whether state rights should include the authority to regulate exemptions. Accordingly, each state can determine whether to use the Federal exemptions or their own state exemptions.
New York has opted out of the Federal Exemptions
I often meet with clients who have read up on bankruptcy law before coming to meet with us and many of them have expressed confusion over whether the federal exemptions apply in New York.
Here in the state of New York, federal exemptions are not used or recognized. There are a number of different New York state statutes which contain exemption provisions. Some of these statutes include the New York Debtor and Creditor Law, the New York Insurance Law, and the New York Civil Practice Law and Rules (CPLR).
Only 16 of the 50 states permit debtors to use the federal exemptions. The remaining states each have their own exemption statutes.
For those readers who live outside of New York, here is a list of states that permit the federal exemptions:
- New Hampshire
- New Jersey
- New Mexico
- Rhode Island