So many of my clients think that when they file for bankruptcy they will somehow lose all of their belongings they worked so hard for. This is not the case at all!
Each state has their own exemption laws that allow the debtor who is filing for bankruptcy to exempt their own property. The exemptions range from exempting your home, tools of your trade, cars, to your jewelry.
he homestead exemption to exempt your home in bankruptcy in New York is $50,000. If you are married then you can exempt up to $100,000 of the value of your home in bankruptcy.
Let’s learn this by way of an example. Suppose your house was worth on the market today $300,000. You owe $250,000 on the mortgage. You have $50,000 of equity. If you were single, you could file for bankruptcy, wipe away all your unsecured debts like credit card debts, medical bills, etc., and still keep your house because of the homestead exemption. Now, you would of course need to continue to pay the mortgage on the house otherwise the bank could foreclose on your house.
Likewise, if your house was worth $300,000 and you had a mortgage of $200,000 – if you were married – you could keep the house in bankruptcy as long as you continue paying the mortgage.
Let’s say your house was worth $3000,000 and you had a mortgage of $100,000 on it, leaving you with $200,000 of equity in the house. That means that the bankruptcy trustee could sell your house give you $50,000 if you are single or $100,000 if married, and give the remaining money left over to the creditors in bankruptcy.
If you would like to speak to me about your own financial situation, please give me a call and i will be happy to give you a free over-the-phone consultation or we can arrange a meeting in my office at: 1515 Broadway, 11th Floor, New York, NY 10036