More than two-thirds of American households have pets, and sometimes they run into financial difficulties. For the most part, though, New York bankruptcy protects debtors’ pets, but there are additional considerations that should assuage pet owners.
- New York exempts pets. Section 5205(a)(4) of the New York Civil Practice and Law Rules exempts domestic animals from bankruptcy, and §5205(h)(2) exempts service animals such as those used by disabled debtors or their family members. This means that debtors can keep these animals out of the bankruptcy estate that’s created in chapter 7. They would be able to keep them in chapter 13 as a matter of course.
- Exemptions can keep pets’ food away from the trustee. Moreover, New York’s exemptions offer debtors up to $1,100 in food for up to 120 days for their domesticated animals. The point is to ensure debtors can feed their pets through bankruptcy. Otherwise the exemption for pets isn’t worth much. For pets or service animals that require exotic food needs, this exemption might make quite the difference for debtors.
- Federal exemptions don’t specifically protect pets, but debtors have options. The federal exemptions, by contrast, do not explicitly identify pets as an asset debtors can completely protect from the bankruptcy estate. However, this doesn’t necessarily leave pet-owning debtors at a disadvantage for two reasons. One, most pets have little resale value to a trustee, so there’s a good chance the trustee will abandon a pet back to the debtor. Two, the $12,625 personal exemption for household possessions can be extended to pets and their needs. Along with the federal wild card exemption, which is $1,250 plus up to $11,850 in an unused homestead exemption, most debtors using the federal exemptions need not worry about their pets in their bankruptcy.
- Non-domesticated animals and animals used for businesses are more difficult to protect. Sometimes the line between pets and animals used for business blurs. Obviously, debtors concerned about farm animals should consider chapter 12 rather than the more common bankruptcy chapters. If the animal isn’t domesticated (New York exemptions) or meant for household use (federal exemptions), then debtors will need to rely more on their wild card exemptions to keep their animals. Also, possession of the animal matters too: If the animal belongs to a business entity, then it’s probably not an issue in a personal bankruptcy.
- Pet costs can affect the means test. Sometimes households do not realize just how expensive their pets are. As a result, if they spend a lot of money on them, then they might have problems passing the means test. For instance, their spending on their pets might exceed the means test deductions. In other words, if such debtors gave up their pets, they would spend less money overall and so they would be able to meet their debt obligations with their incomes (or file in chapter 13). Perhaps it’s possible to argue that caring for a pet is a special circumstance in the means test, but it might not be easy.
- Pets are often lost in foreclosure. Finally, I should note that pets are often the biggest victims of foreclosure because the owners can’t take care of them in their new home, if they have one. Sometimes debtors physically abandon their pets in the homes, but mostly they give them up to people they know or shelters. It’s one more reason that bankruptcy is preferable to foreclosure.
If you are a pet owner and encountering financial difficulties then talking to an experienced New York bankruptcy lawyer can help. Pets are rarely a hindrance to a New York bankruptcy, so acting sooner can save them and head off any further setbacks.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.
