By: Robert L, Pryor, Esq
On June 1, 2022, the New York State Senate passed Bill No 55040 to increase the amount of equity in one’s home protected from judgment creditors. The bill, if and when passed by the New York State Assembly will increase the homestead exemption available in the counties of Kings, Queens, New York, Nassau, Suffolk, Bronx Richmond, Rockland, Westchester and Putnam from the current amount of $179,975 to $250,000. The homestead exemption is available to each of the co-owners of a parcel of real property, cooperative apartment or condominium.
The same bill has been prepared in the New York State Assembly and has been referred to the Committee on Codes. In the event the Assembly approves the bill, it will become law and the implications will be substantial.
The New York homestead exemption has been incorporated into bankruptcy law so that the same exemption is available to a person forced to file a Chapter 7 bankruptcy liquidation case. Currently the first $359,950 of equity that a husband and wife possess in their home is protected from creditors. Thus if a house owned by both husband and wife is worth $600,000 with a $300,000 mortgage against it they can protect their entire equity in a bankruptcy as it is less than the $359,950 number. If Bill No 55040 becomes law, then in such event, given the same $300,000 mortgage obligation husband and wife can fully protect a home worth $800,000 ($800,000 – $300,000 mortgage = $500,000 which $500,000 in equity is fully protected). We will be monitoring the progress of the companion bill as it passes through the Assembly and will post an article if and when it passes.
Robert L. Pryor is a partner in the Westbury N.Y. firm of Pryor and Mandelup LLP and has practiced bankruptcy law for over 30 years. He is a Chapter 7 Trustee and Former Law Clerk to Hon. C. Albert Parente, Chief Bankruptcy Judge of the Eastern District of New York.