Understanding New York State Bankruptcy Exemptions (2026 Update)

cdribusch
Mar 4
3 min read

Filing for bankruptcy doesn’t mean losing everything. In fact, exemption laws exist to help you keep essential property so you can maintain stability while getting a fresh financial start. New York offers one of the most generous exemption systems in the country—especially for homeowners. This post breaks down the major exemptions, how they work, and what filers need to know in 2026.

1. Choosing Between New York State and Federal Exemptions

New York is a choice state, which means eligible filers may use either the New York State exemptions or the federal bankruptcy exemptions, but not both. To use New York exemptions, you must have lived in the state for at least two years prior to filing.

Many filers choose the New York system because it offers stronger protection for homes and certain personal property. However, the federal system may be better for filers with limited home equity but substantial personal property.

2. New York Homestead Exemption

New York’s homestead exemption is one of the most valuable benefits for homeowners. The amount you can protect depends on the county where you live. As of the most recent adjustment (April 2024), the protected equity amounts are: [dfs.ny.gov ]

$204,825 – High‑cost counties (e.g., NYC boroughs, Nassau, Suffolk, Rockland, Westchester, Putnam)
$170,700 – Mid‑cost counties (including Albany, Dutchess, Orange, Saratoga, Ulster, Columbia)
$102,400 – All other counties

Married couples filing jointly may double the exemption. [dfs.ny.gov ]

For comparison, the federal homestead exemption is only $27,900, making New York’s exemptions significantly more protective for homeowners.

3. Motor Vehicle Exemption

New York allows bankruptcy filers to protect equity in one vehicle up to:

$4,825, or
$11,975 if the vehicle is specially equipped for a disabled debtor.

This exemption is periodically adjusted for inflation.

4. Personal Property Exemptions

New York protects several categories of essential personal property. As of the most recent statutory adjustments:

Household goods & furnishings: Various items necessary for day‑to‑day living, including clothing, furniture, appliances, a computer, and a cell phone.
Jewelry & art: Up to $1,000 value.
Tools of the trade: Up to $3,000, allowing professionals to keep tools needed for work.
Domestic animals & food: Up to $1,000 for animals plus food.

These amounts reflect recent CPI‑based adjustments and remain in effect until the next scheduled update in 2027. [dfs.ny.gov ]

5. Cash & Wildcard Exemption

If you do not claim a homestead exemption, you may use New York’s wildcard exemption:

Up to $1,325 in cash or any personal property.

Additionally, New York allows up to $6,825 in cash exemption when not using the homestead. [dfs.ny.gov ]

6. Retirement Accounts & Benefits

Most tax‑qualified retirement accounts—401(k)s, IRAs, pensions, and similar plans—are fully exempt under New York law. Public benefits such as Social Security, unemployment, disability, and veterans' benefits are also protected.

7. Wages & Income

New York protects:

90% of wages earned in the 60 days before filing bankruptcy.
Certain types of income such as child support, alimony (as needed for support), and public assistance benefits.

8. Personal Injury, Wrongful Death, and Legal Settlements

New York exemptions also cover:

Personal injury awards: Up to $8,550.
Wrongful‑death payments reasonably necessary for support.

Final Thoughts

New York’s exemption system is both powerful and complex. Choosing the right exemption set—state or federal—can make a dramatic difference in what property you can protect during bankruptcy. The values above are updated through 2026, but because exemption amounts adjust every three years for inflation, it’s crucial to verify the current limits before filing.

If you’re considering filing for Chapter 7 or Chapter 13 bankruptcy in New York, speaking with a qualified bankruptcy attorney can help ensure you maximize your exemptions and keep the assets most important to you.