26 Dec Outgoing Governor Paterson Gives New York Debtors Something to Cheer About!
Gov. David Paterson has signed a bill that gives more protection to New Yorkers who file bankruptcy or who have been sued by bill collectors. The new law increases the exemptions that people can use to protect their property from forced sales by bankruptcy trustees and debt collectors. It also allows a choice between State and Federal exemptions in bankruptcy cases filed in New York State. Consumer lawyers don’t get much to cheer about, but this new law will allow many more financially strapped New Yorkers to get the debt relief they need.
2011 will likely see a large increase in the number of New Yorkers who are forced to file for bankruptcy. This is because of the slowness of the â€œeconomic recoveryâ€ and now because they will be able to protect more assets while they are eliminating their debts.
Debtors can now protect up to $4,000 in their vehicle (up from $2400), $10,000 if the vehicle is equipped for people with disabilities. New York homeowners can now exempt $75,000 each of equity in their home (up from $50,000) in upstate areas like Binghamton, Syracuse, Rochester, and Buffalo. The homestead exemption goes up to $100,000 in the Hudson Valley, and as much as $150,000 in the New York City area and Long Island.
NY Public Interest Research Groupâ€™s legislative counsel said â€œIn approving an update to New Yorkâ€™s out-of-date bankruptcy and debtor protection laws, the Governor has stood with average consumers and stood up to the banks and credit card companies who drove the economy into the ditch.â€
In his bill signing statement, the Governor said, â€œDuring this time of economic crisis, it is our responsibility as public servants to protect those who are struggling the most. A reconsideration of the current exemptions, which in some cases have not been changed in decades, is particularly warranted when an increasing number of individuals find themselves in dire financial condition.â€
The purpose of such exemptions is to permit debtors in bankruptcy to retain a modest amount of personal property and equity in their homes so that they can continue to maintain their lives, and to protect them from becoming homeless, unemployed, or otherwise dependent on the State.
The exemption increases will allow more people to file for Chapter 7, and will allow many of those filing Chapter 13 to pay less to their Chapter 13 trustee.
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