As New York appears to be on the verge of greatly expanding its asset exemptions for bankruptcy and judgment debtors, it is instructive to review where our current exemptions came from.Back in the day, say after the Revolutionary War, collecting from debtors was simple: they were thrown into jail until they, or their family or friends, paid their debt. Alternatively, the debtor could, from jail, petition the court for a discharge of his debts (and his incarceration) in return for transferring all his assets to his creditors, a proceeding very similar to modern bankruptcy. For a fantastic analysis of early bankruptcy, see The New Yorker Magazine article by Jill Lepore, April 13, 2009, p. 34.
Both the New York Assembly and Senate have passed Bill S. 7034, which expands New York's bankruptcy and judgment debtor asset exemptions. The bill must be signed by the governor; it will then be effective thirty days later. Highlights of the changes are:1) Motor vehicle exemption increased to $4,000, and available to both bankruptcy and non-bankruptcy judgment debtors;2) Household goods exemption for bankruptcy debtors doubled to $10,000, and the cash exemption (alternative to homestead exemption) for bankruptcy debtors doubled to $5,000;3) Family library exemption increased to $500;4) Domestic animals exemption increased to $1,000;5) Computer, cell phone and health aids added to list of necessary household goods;6) The $35 watch exemption changed to a $1,000 watch, jewelry and art exemption;7) Tools of the trade exemption increased to $3,000;8) For a debtor not using a homestead exemption, a $1,000 catch-all exemption;9) Increase in homestead exemption: for New York, Long Island, and the Lower Hudson Valley: $150,000; for the Upper Hudson Valley and Albany: $100,000; for the rest of New York: $75,000.10) All dollar amounts in CPLR 5205 and 5206, and Debtor & Creditor 282 and 283. will be adjusted for inflation every three years, starting April 2012.11) Bankruptcy debtor may opt to use the federal exemption of Bankruptcy code section 522 rather than the New York exemptions.