Anyone who lived through or has read about the 1970s thinks of inflation as a secret thief that’s trying to cheat them out of their wages. Or something like that. The economics is much more complicated—and consumer-price inflation has been historically low for a while—but one place inflation can cause consumer debtors serious injury is when it eats away at the value of their bankruptcy and judgment exemptions. Say a debtor exempts $10,000 of auto equity in bankruptcy, then as inflation occurs, that $10,000 is worth less than before. It’s a problem for most states, but New York bankruptcy has an adjustment mechanism that keeps debtors’ exemptions valuable. Here is a list of the state’s most common exemptions, with attention to the ones that have changed, as well as and where they are found in New York’s Civil Practice Law & Rules (CPLR).
- A stove or home heating equipment in the debtor’s dwelling, sufficient fuel for 120 days, and one sewing machine. (CPLR § 5205(a)(1))
- The debtor’s religious texts, family portraits, school books, and other books valued at $575 (used to be $550, up 4.5 percent (+$25)). (CPLR § 5205(a)(2))
- The debtor’s seat or pew at a public place of worship. (CPLR § 5205(a)(3))
- 120 days’ worth of food for the debtor; the debtor’s domesticated animals along with 120 days’ worth of food for them not exceeding $1,150 (used to be $1,100, up 4.5 percent (+$50)). (CPLR § 5205(a)(4))
- Clothes, household furniture, a refrigerator, radio, television, computer (and related equipment), one cell phone, crockery, tableware, and cooking utensils, and all prescribed health aids. (CPLR § 5205(a)(5))
- A wedding ring, watch, jewelry and art not exceeding $1,150 (used to be $1,100, up 4.5 percent (+$50)). (CPLR § 5205(a)(6))
- Up to $3,400 in tools of trade, including 120 days’ worth of food for the debtor’s team (formerly $3,300, up 3 percent (+$100)). (CPLR § 5205(a)(7))
- One motor vehicle with a net value of $4,550; $11,375 if the vehicle is equipped to help a disabled debtor (formerly $4,425 and $11,025, respectively, up 2.8 percent (+$125) and 3 percent (+$350), respectively). (CPLR § 5205(a)(8))
- $1,150 in cash if the debtor does not claim a homestead exemption (used to be $1,100, up 4.5 percent (+$50)). (CPLR § 5205(a)(9))
- A cause of action by the debtor to recover any of the above items. (CPLR § 5205(b))
- Trust funds created by someone other than the debtor. (CPLR § 5205(c))
- Up to 90 percent of the payments to the debtor from an exempt trust, and up to 90 percent of the debtor’s earnings from 60 days before the judgment. (CPLR § 5205(d)(1)-(2))
- Alimony payments to a wife or to a child who happen to be debtors. (CPLR § 5205(d)(3))
- Exemptions for pay and equipment for debtors serving in the armed forces. (CPLR § 5205(e))
- Up to 90 percent of money owed to the debtor for milk sales. (CPLR § 5205(f))
- The debtor’s security deposit for rental housing. (CPLR § 5205(g))
- Certain health care-related property, e.g. hearing aids, or guide dogs. (CPLR § 5205(h))
- An acceleration right for life insurance proceeds. (CPLR § 5205(i))
- Savings in college trusts for New York State colleges. (CPLR § 5205(j))
- Up to 10 percent of the compensatory damages owed to a victim of a crime committed by the debtor, as determined in a separate, non-criminal proceeding. (CPLR § 5205(k))
- Up to $2,850 in cash in a bank account above amounts directly deposited for statutorily exempt deposits, which include Social Security, supplemental security income, child support, veteran’s benefits, public assistance, worker’s compensation, unemployment insurance, pensions, railroad retirement, and black lung benefits (formerly $2,750, up 3.6 percent (+$100)). (CPLR § 5205(l))
- The debtor’s homestead exemption rose by more than 3 percent:
Kings, Queens, New York, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester and Putnam counties: $165,550 to $170,825 (+$5,275).
Dutchess, Albany, Columbia, Orange, Saratoga and Ulster counties: $137,950 to $142,350 (+$4,400).
All remaining counties: $82,775 to $85,400 (+$2,625)
(CPLR § 5206(a)-(e))
- A burial plot. (CPLR § 5206(f))
Of these the increases to the homestead exemption, cash exemption, and automobile exemption are by far the most consequential to debtors.
The state’s table of the changes to the exemptions can be found here. The actual laws themselves are here: CPLR sections 5205 and 5206.
Inflation adjustments to exemptions have their strongest impacts soon after they occur, so if you own these assets and are experiencing financial difficulties, then now is the time to consult with an experienced New York bankruptcy lawyer.
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.
