Share this article

print logo

State law allows more debtors to keep homes Homestead exemption raised to $50,000

While the federal government makes it harder for Americans to file bankruptcy, New York state has quietly enacted a law that gives debtors a break.

A law that received little publicity or fanfare when it took effect on Aug. 30 will allow more state residents to keep their homes when they file bankruptcies.

The law raises the state's homestead exemption from $10,000 to $50,000.

"In other words, if you file a bankruptcy, up to $50,000 of the equity in your home is now exempt . . . It's protected," said Alvin M. Greene, a Buffalo attorney who specializes in bankruptcies. "You'll get to keep that $50,000 in equity. It will not become part of the bankruptcy estate that goes to your creditors."

The change is applauded by Greene and others who feel Congress went too far in passing a federal law that places tighter restrictions on bankruptcy filers.

"This bill will help to provide some relief from the stringent bankruptcy laws recently passed by Congress," said Pete Gannon, a spokesman for Assemblyman Ronald T. Canestrari, an Albany Democrat who proposed the law.

"But I wouldn't classify this as a knee-jerk reaction to what Congress did. This has been discussed in Albany for many years. The idea behind it is, just because someone files a bankruptcy, they shouldn't become homeless."

The $50,000 figure is "certainly not extravagant," Gannon said, considering the current cost of buying a home in the state.

According to Greene, the levels of homestead exemptions vary from state to state, throughout the nation, and New York's has traditionally been one of the lowest figures.

Most of the changes imposed by a controversial federal bankruptcy reform law will take effect on Oct. 17. The new law will require more debtors to file Chapter 13 bankruptcies, which require them to repay a portion of their debt on a strict schedule.

Critics of the national reform law say it will punish people who run into financial problems because of medical bills, job layoffs and other difficulties.

Supporters of reform say it was needed because many people were running up huge credit card bills, with no intention of repaying them, and then using bankruptcy to walk away from the debt.

New York's new law on homestead exemptions took effect on Aug. 30, after being signed by Gov. George E. Pataki, Gannon said. The law was passed on June 16.


There are no comments - be the first to comment