Chapter 7 Bankruptcy Exemptions in New York: What You Can Keep in 2026

One of the biggest fears people have before filing Chapter 7 bankruptcy is losing everything they own. Fortunately, that is not how Chapter 7 usually works.

Bankruptcy exemptions allow you to protect certain property from being sold by the Chapter 7 trustee. These exemptions may protect your home equity, car, clothing, household goods, retirement accounts, tools of the trade, personal injury recovery, and other important assets.

For New York residents, understanding the New York Chapter 7 bankruptcy exemptions 2026 rules is especially important because New York allows eligible debtors to choose between the New York exemption system and the federal bankruptcy exemption system. The right choice can make a major difference in what you keep.

Kamini Fox Law PLLC helps individuals and families throughout New York understand their bankruptcy options, protect exempt property, and move forward with greater financial stability.

What Are Bankruptcy Exemptions?

In a Chapter 7 bankruptcy case, your assets become part of the bankruptcy estate. A Chapter 7 trustee reviews those assets to determine whether any nonexempt property can be sold to repay creditors.

Bankruptcy exemptions protect specific property, or a specific amount of equity in property, from liquidation.

In simple terms:

Exempt property is protected. Nonexempt property may be at risk.

Many Chapter 7 cases are “no-asset” cases, meaning the debtor’s property is fully protected by exemptions, and there is nothing available for the trustee to sell.

Are New York Bankruptcy Exemptions Updated for 2026?

Yes. The New York exemption amounts currently used for 2026 reflect the exemption adjustments that took effect on April 1, 2024. The New York Department of Financial Services states that these exemption amounts are adjusted every three years, with the next adjustment scheduled for April 1, 2027.

That means the 2024 adjusted exemption figures generally remain the key New York exemption amounts for Chapter 7 cases filed in 2026.

New York vs. Federal Bankruptcy Exemptions: Which Can You Use?

New York allows bankruptcy filers to choose either:

1. New York State bankruptcy exemptions

2. Federal bankruptcy exemptions

You generally cannot mix and match between the two systems. Choosing the right exemption set depends on your assets, home equity, vehicle equity, cash, retirement accounts, expected tax refunds, pending lawsuits, and personal property.

For many homeowners in downstate New York, the New York homestead exemption may offer stronger protection than the federal homestead exemption. For some renters or people with limited home equity but more cash or personal property, the federal exemptions may be more useful because of the federal wildcard exemption.

This is one of the most important decisions in a Chapter 7 case. Choosing the wrong exemption system can expose assets that might otherwise have been protected.

New York Homestead Exemption in 2026

The homestead exemption protects equity in your primary residence. This may include a house, condominium, cooperative apartment, or mobile home used as your principal residence. New York’s homestead statute applies to property owned and occupied as a principal residence.

For 2026, the adjusted New York homestead exemption amounts are:

County Group	2026 Homestead Exemption Amount
Kings, Queens, New York, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester, and Putnam	$204,825
Dutchess, Albany, Columbia, Orange, Saratoga, and Ulster	$170,700
All other New York counties	$102,400

These figures come from the 2024 New York exemption adjustment schedule, which remains in effect until the next scheduled adjustment in 2027.

Can Married Couples Double the Homestead Exemption?

In many cases, married couples filing jointly may be able to double the homestead exemption if both spouses own the property and are entitled to claim it.

For example, a married couple who jointly own and live in a home in Nassau County may be able to protect up to $409,650 in home equity, depending on the facts.

Example: Home Equity in Nassau County

Assume you own a home in Nassau County worth $650,000 and owe $500,000 on the mortgage.

Your equity is:

$650,000 - $500,000 = $150,000

Because Nassau County falls within the highest New York homestead exemption category, the 2026 exemption amount is $204,825 for one eligible owner. In this example, the equity may be fully protected.

However, if your equity is higher than the available exemption, the Chapter 7 trustee may review whether a sale would benefit creditors after mortgages, closing costs, trustee fees, and exemption payouts are considered.

Motor Vehicle Exemption in New York

If you own a vehicle, the exemption protects a certain amount of equity in the car.

For 2026, New York’s motor vehicle exemption is:

Asset	2026 New York Exemption Amount
Motor vehicle equity	$5,500
Vehicle equipped for use by a person with a disability	$13,625

The New York Department of Financial Services lists the motor vehicle exemption at $5,500 under CPLR § 5205(a)(8) and Debtor and Creditor Law § 282(1), with a higher applicable amount of $13,625 reflected for certain disability-related vehicle protections.

What If You Still Have a Car Loan?

If your car is financed, the exemption protects your equity, not the full market value of the vehicle.

For example:

• Vehicle value: $18,000

• Loan balance: $15,000

• Equity: $3,000

In this example, the $3,000 in equity may be protected by the New York vehicle exemption.

However, keeping a financed vehicle in Chapter 7 also requires addressing the loan. You may need to stay current, reaffirm the debt, redeem the vehicle, or surrender it, depending on the case.

Personal Property Exemptions in New York

New York exemptions may protect many ordinary household and personal items, including clothing, furniture, appliances, books, electronics, wedding rings, religious texts, family pictures, prescribed health aids, and other essentials.

For 2026, New York’s adjusted exemption schedule includes several important personal property amounts, including:

Property Type	2026 New York Exemption Amount
Books and certain personal items under CPLR § 5205(a)(2)	$675
Certain household, family, and personal items under CPLR §§ 5205(a)(4), (6), and (9)	$1,325
Tools of the trade under CPLR § 5205(a)(7)	$4,075
Certain broader personal property categories	$13,625

The DFS schedule confirms these adjusted exemption amounts, effective from April 1, 2024 until the next scheduled adjustment in 2027.

Cash Exemptions and Wildcard Planning

Cash, bank account balances, expected tax refunds, and other liquid assets require special attention in Chapter 7.

New York provides certain limited exemptions for cash and personal property. For 2026, New York’s exemption schedule includes:

Exemption Category	2026 Amount
CPLR §§ 5205(a)(4), (6), and (9)	$1,325
Debtor and Creditor Law § 283(2)(c), often relevant when no homestead exemption is claimed	$6,825

These amounts can be especially important for renters, people without home equity, or people expecting tax refunds.

Because New York’s cash protection is more limited than many people expect, timing matters. Filing right after receiving a paycheck, tax refund, bonus, settlement, or bank deposit may create avoidable issues if the funds are not fully exempt.

Retirement Accounts Are Often Protected

Many retirement accounts receive strong protection in bankruptcy. These may include:

• 401(k) accounts

• 403(b) accounts

• Pension plans

• Profit-sharing plans

• Certain IRAs

• Certain tax-qualified retirement accounts

Retirement exemptions can be complex, especially when dealing with inherited IRAs, rollovers, recent contributions, or accounts that may not be tax-qualified. Before filing Chapter 7, it is important to identify each retirement account and confirm how it is protected.

Personal Injury Claims and Lawsuit Proceeds

If you have a pending personal injury claim, workers’ compensation claim, employment case, or other lawsuit, you must disclose it in your bankruptcy schedules.

For 2026, the New York exemption adjustment schedule lists $10,250 under Debtor and Creditor Law § 282(3)(iii), which is commonly relevant to certain personal injury recoveries.

This is an area where legal guidance is especially important. A pending lawsuit may be considered an asset, even if no money has been received yet. Filing without properly analyzing the claim can put part of the recovery at risk.

EDNY Chapter 7 Filing Rules: Eastern District of New York

If you live in Brooklyn, Queens, Staten Island, Nassau County, or Suffolk County, your Chapter 7 case will generally be filed in the United States Bankruptcy Court for the Eastern District of New York.

The EDNY has bankruptcy court locations in Brooklyn and Central Islip. The Brooklyn location serves Kings, Queens, and Richmond Counties.

The EDNY Chapter 7 checklist states that the Chapter 7 filing fee is $338 and that individuals may pay the fee in installments using Official Form 103A or request a fee waiver using Official Form 103B. The EDNY checklist also warns that required documents must be filed within 14 calendar days of the petition's filing, unless otherwise indicated, or the case may be dismissed.

Common EDNY Chapter 7 filing requirements include:

• Voluntary Petition for Individuals Filing for Bankruptcy

• Statement About Your Social Security Numbers

• Credit counseling certificate

• List of creditors

• Creditor matrix

• Schedules A/B through J

• Statement of Financial Affairs

• Means test forms

• Statement of Intention

• Filing fee, installment application, or fee waiver request

  
  

SDNY Chapter 7 Filing Rules: Southern District of New York

If you live in Manhattan, the Bronx, Westchester, Rockland, Orange, Dutchess, Putnam, or certain other counties, your case may be filed in the United States Bankruptcy Court for the Southern District of New York. The SDNY court states that it serves Bronx, Dutchess, New York, Orange, Putnam, Rockland, Sullivan, and Westchester Counties, with concurrent jurisdiction over Columbia, Ulster, and Greene.

The SDNY Chapter 7 individual debtor checklist lists the Chapter 7 filing fee as $338 and notes that debtors may file Official Form 103A to request installment payments or Official Form 103B to seek a fee waiver if eligible. It also states that the credit counseling certificate may be due at filing or within 14 days, depending on how the debtor completes the petition.

The SDNY also explains that Official Bankruptcy Forms must be used to file and take action in bankruptcy cases.

What Property Can You Usually Keep in a New York Chapter 7 Case?

Every case is different, but many Chapter 7 filers can protect some or all of the following:

• Primary residence equity, up to the applicable homestead exemption

• A vehicle, up to the applicable vehicle equity exemption

• Clothing and ordinary household goods

• Furniture and appliances

• Work tools and equipment, up to applicable limits

• Qualified retirement accounts

• Certain public benefits

• Certain personal injury recovery amounts

• Certain cash or bank account balances

• Wedding rings and prescribed health aids

• Social Security benefits, depending on how funds are held and traced

The key is not simply what you own. The key is what your property is worth, how much equity exists, whether there are liens, which exemption system you choose, and how the assets are listed in your bankruptcy schedules.

What Property May Be at Risk in Chapter 7?

Property may be at risk if it is not fully covered by exemptions. This may include:

• Significant home equity above the homestead exemption

• Expensive vehicles with high equity

• Large bank balances

• Valuable jewelry or collectibles

• Investment accounts

• Non-retirement brokerage accounts

• Second homes or vacation properties

• Business interests

• Claims against other people or companies

• Tax refunds

• Recently transferred assets

• Luxury items

That does not automatically mean Chapter 7 is the wrong choice. However, it does mean you should speak with a New York bankruptcy attorney before filing.

Why Exemptions Must Be Planned Before Filing

Bankruptcy planning should happen before the petition is filed, not after.

Once your Chapter 7 case is filed, your schedules are submitted under penalty of perjury. If assets are omitted, undervalued, transferred improperly, or claimed under the wrong exemption, the case can become much more complicated.

Pre-filing exemption planning can help determine:

• Whether Chapter 7 is safe

• Whether Chapter 13 is a better option

• Whether assets are fully protected

• Whether timing affects bank accounts or tax refunds

• Whether the New York or federal exemptions are better

• Whether any transfers need to be reviewed

• Whether a trustee may question asset values

  
  

Common Chapter 7 Exemption Mistakes in New York

1. Assuming all property is automatically protected

Exemptions have limits. If an asset exceeds the available exemption, the nonexempt portion may be reviewed by the trustee.

2. Choosing the wrong exemption system

New York filers may have a choice between New York and federal exemptions, but the better choice depends on the asset mix.

3. Filing with too much cash in the bank

Cash and bank account balances can be vulnerable if they exceed available exemptions.

4. Forgetting about tax refunds

Expected tax refunds are assets and must be disclosed.

5. Failing to disclose lawsuits

Pending claims, even uncertain claims, must be listed.

6. Transferring property before filing

Selling, gifting, retitling, or transferring assets before bankruptcy can trigger trustee review and may create serious problems.

7. Guessing property values

Realistic property valuation matters. Overstating or understating values can affect the exemption strategy.

Is Chapter 7 Right for You in 2026?

Chapter 7 may be a good option if you have unsecured debt and limited nonexempt assets. It is often used to address:

• Credit card debt

• Medical debt

• Personal loans

• Old utility bills

• Deficiency balances

• Certain judgments

• Collection accounts

Chapter 7 may not eliminate every type of debt. Child support, most student loans, certain taxes, criminal fines, and some debts based on fraud or misconduct may not be discharged.

If you have assets that cannot be fully protected, Chapter 13 may offer an alternative because it can allow you to keep property while repaying creditors through a court-approved payment plan.

Speak With a New York Chapter 7 Bankruptcy Attorney

The New York Chapter 7 bankruptcy exemptions for 2026 can protect many important assets, but only when they are applied correctly. Your home, car, bank accounts, retirement funds, personal property, and expected refunds should be reviewed before filing.

Kamini Fox Law PLLC helps New York individuals and families understand their bankruptcy options, protect exempt property, and pursue debt relief with confidence.

If you are considering Chapter 7 bankruptcy in New York, contact Kamini Fox Law PLLC to schedule a consultation.

FAQ: New York Chapter 7 Bankruptcy Exemptions 2026

What are bankruptcy exemptions in Chapter 7?

Bankruptcy exemptions protect certain property from being sold by the Chapter 7 trustee. If an asset is fully exempt, you can usually keep it. If an asset is not fully exempt, the trustee may evaluate whether it can be sold for the benefit of creditors.

What are the New York Chapter 7 bankruptcy exemptions for 2026?

The 2026 New York exemption amounts generally reflect the April 1, 2024, adjusted exemption schedule, with the next adjustment scheduled for April 1, 2027. Key exemptions include homestead protection up to $204,825 in certain downstate counties, a $5,500 motor vehicle exemption, tools of the trade protection up to $4,075, and various personal property and cash exemptions.

Can I keep my house if I file Chapter 7 in New York?

You may be able to keep your home if your equity is fully protected by the applicable homestead exemption and you remain current on any mortgage obligations. In 2026, the New York homestead exemption is up to $204,825 in counties such as Kings, Queens, New York, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester, and Putnam.

Can I keep my car in Chapter 7 bankruptcy?

You may be able to keep your car if your vehicle equity is covered by the applicable exemption and you can address any car loan. In 2026, New York’s motor vehicle exemption is $5,500, with higher protection for certain vehicles equipped for use by a person with a disability.

Can I use federal bankruptcy exemptions in New York?

Yes. New York allows eligible bankruptcy filers to choose between the New York and federal exemption systems. You generally cannot mix both systems, so choosing the right set is important.

What court handles Chapter 7 cases on Long Island?

Chapter 7 cases for Nassau County and Suffolk County are generally filed in the United States Bankruptcy Court for the Eastern District of New York, often through the Central Islip courthouse.

What court handles Chapter 7 cases in Manhattan?

Chapter 7 cases for Manhattan are generally filed in the United States Bankruptcy Court for the Southern District of New York.

What happens if my property is worth more than the exemption?

If your property has nonexempt value, the Chapter 7 trustee may review whether selling the asset would benefit creditors. In some cases, Chapter 13 may be a better option because it may allow you to keep property while repaying creditors through a plan.