- September 08, 2005
- All Issuing Offices in New York
- Amendment to CPLR Sec. 5206 Homestead Exemption
As reported in today's New York Law Journal, on August 30, 2005, Governor Pataki signed Chapter 623 of the Laws of 2005 amending certain portions of the Civil Practice Law and Rules ("CPLR") Section 5206. This section details the extent to which real property is exempt from application to satisfy money judgments inNew York.
Prior to August 30, a judgment debtor's homestead, which is essentially defined to be either a lot of land with a dwelling, a cooperative apartment, a condominium unit or a mobile home, owned and occupied as a principal residence, was exempt from application to satisfy a money judgment, but only to the extent that it did not exceed ten thousand dollars ($10,000.00) in value. Further, Section 282 of the Debtor and Creditor Law made the same set of exemptions available to the New York resident upon filing of a bankruptcy petition.
Effective August 30, pursuant to the amended CPLR Section 5206, the amount of equity in the debtor's homestead shielded from her judgment creditors and, consequently, from the bankruptcy trustee has been increased to fifty thousand dollars ($50,000.00). As a result, it may be that there will be an increase in consumer bankruptcy filings, Chapter 7 proceedings in particular, as debtors may now shield a significantly greater amount of equity in their homes from the reach of creditors. This may especially true in the case of married couples who, assuming co-ownership of the homestead, have each been allowed to claim the homestead exemption where a joint bankruptcy petition is filed, effectively creating a $100,000.00 exemption.
As justification for the increase in the amount of the exemption, sponsors of the legislation cite the dramatic rise in real estate values since the exemption amount was last considered and the advent of stricter rules of eligibility for bankruptcy filings when the federal Bankruptcy Abuse Reduction and Consumer Protection Act of 2005 becomes effective on October 17 of this year.
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