For most New Yorkers, the answer is no. The majority of people who file bankruptcy keep both their home and their car. New York’s exemption laws shield a generous amount of equity in your property, and in many cases, filing actually helps you hold onto assets you were at risk of losing to foreclosure or repossession. The outcome depends on your equity, your payment history, and the chapter you file under. A Long Island bankruptcy attorney can review your finances and build a plan that protects what matters most to you.
How Do New York’s Bankruptcy Exemptions Protect Your Property?
Bankruptcy does not look at what your property is worth. It looks at your equity, which is the value of the property minus what you still owe on it. Exemptions then shield that equity from your creditors. New York lets you choose between the state and federal exemption systems, and for homeowners, the state system is usually far more protective.
Under New York law, the homestead exemption protects up to $204,825 of equity in your primary residence for Nassau and Suffolk County residents, the highest tier in the state. Married couples who co-own their home and file jointly can double that protection to $409,650. The motor vehicle exemption covers up to $5,500 in car equity, or $13,625 for a vehicle equipped for a disabled driver. These figures adjust every three years, with the next update scheduled for April 2027.
Can You Keep Your House If You File Chapter 7 in New York?
Yes, in most cases. A Chapter 7 trustee can only sell property that is not exempt, and one of your primary protections as a filer is the right to keep your exempt property while discharging your debts. If your home equity falls within the homestead exemption and you are current on your mortgage, you keep your home. The mortgage itself survives bankruptcy, so you simply continue making your monthly payments.
Consider a Long Island home worth $650,000 with a $475,000 mortgage balance. That leaves $175,000 in equity, which the homestead exemption covers in full. If your equity exceeds the exemption, Chapter 13 may be the better path because it lets you protect that extra value through a repayment plan.
What Happens to Your Car When You File Bankruptcy?
Your car goes through the same equity analysis. Say your vehicle is worth $18,000 and you still owe $14,000 on the loan. Your equity is $4,000, which fits comfortably within the $5,500 exemption, so the trustee has no claim to it.
The key is staying current on your car loan. Bankruptcy wipes out your personal liability, but the lender keeps its lien, and falling behind can still lead to repossession. In Chapter 7, you can sign a reaffirmation agreement, which is a commitment to keep making payments in exchange for keeping the vehicle. Your attorney can help you decide whether reaffirming makes financial sense or whether another option serves you better.
How Does Chapter 13 Help You Keep a Home or Car You Are Behind On?
If you have already missed mortgage or car payments, Chapter 13 is often your strongest tool. The moment you file, the automatic stay stops foreclosure proceedings and repossession efforts in their tracks. Your missed payments are then folded into a three- to five-year repayment plan, allowing you to catch up gradually while you keep the property and stay current going forward. Chapter 13 also protects equity that exceeds the exemption limits. Instead of surrendering the asset, you pay its nonexempt value through the plan. For many Long Island homeowners, that difference is what makes it possible to keep the family home. Not sure which chapter fits your situation? Comparing Chapter 7 and Chapter 13 side by side with an attorney is the best place to start.
You Can Protect Your Home, Your Car, and Your Fresh Start
Fear of losing your home or car keeps too many people trapped in debt longer than they need to be. At Robert H. Solomon, PC, we have spent more than 40 years showing Long Island residents that bankruptcy is designed to protect what you have, not take it away.
Contact us to schedule your free consultation—payment plans are available. Se habla español.