Will You Lose Your Investments if You File Bankruptcy in New York?

Apr, 2024 - by CMI

Will You Lose Your Investments if You File Bankruptcy in New York?


After the wake of COVID 19’s creation of financial hardship in US household, many individuals took to investing during the pandemic.

But, what happens when you file bankruptcy in New York?

Filing for bankruptcy can be an overwhelming choice, particularly when you have investments at stake. If you're considering bankruptcy in New York, you may ponder what will happen to your investments. This article points to address common concerns and give clarity on how filing liquidation in New York may affect your investments.

Understanding Bankruptcy in New York

Before digging into the destiny of your investments, it's fundamental to get it the nuts and bolts of insolvency in New York. Liquidation is a lawful handle that permits people or businesses to look for alleviation from overpowering obligation. In New York, bankruptcy cases are basically recorded beneath Chapter 7 or Chapter 13 of the Insolvency Code, each with its implications for investments.

Chapter 7 Liquidation: Liquidation vs. Exemptions

Chapter 7 bankruptcy, regularly alluded to as bankruptcy insolvency, includes the deal of non-exempt assets to reimburse lenders. In New York, certain assets may be absolved from bankruptcy, meaning you can keep them indeed after filing for bankruptcy. Excluded resources commonly include a parcel of value in your main home, retirement accounts, and individual assets up to certain dollar limits.

Please note that you generally have to qualify for a Chapter 7 bankruptcy under the New York Bankruptcy means test

Chapter 13 Bankruptcy: Repayment Plan

Chapter 13 bankruptcy, on the other hand, permits people to reorganize their obligations and make a reimbursement arrangement from a three to five year period. Unlike Chapter 7, Chapter 13 does not include bankruptcy of resources. Instead, you can hold your investments while making organized installments to banks based on your expendable income.

Impact on Investments in Chapter 7 Bankruptcy

If you record for Chapter 7 insolvency in New York, your ventures may be subject to bankruptcy to fulfill your obligations. Be that as it may, it's necessary to get the available New York bankruptcy exemptions to secure certain investments from being seized by lenders. For illustration, retirement accounts such as 401(k)s, IRAs, and benefits are ordinarily excluded from bankruptcy in New York, permitting you to defend your long-term savings.

Exemptions for Investments in New York

Under New York bankruptcy law, a few exceptions are accessible to protect specific types of investments from lenders. These exceptions shift in scope and size, giving indebted individuals alternatives to defend their monetary investments. Common exceptions that may apply to investments include:

1. Estate Exception: New York offers a property exception that permits you to secure a certain sum of value in your essential home from banks. Whereas this exclusion fundamentally applies to real estate, it can indirectly protect your home if you arrange to utilize profits from the sale to reinvest.

2. Retirement Accounts: As mentioned prior, retirement accounts such as 401(k)s, IRAs, and annuities are ordinarily excluded from bankruptcy procedures in Modern York. This exception guarantees that your retirement reserve funds stay untouched, permitting you to keep up monetary security for the future.

3. Individual Property Exception: New York gives exceptions for individual property, including family products, clothing, and certain resources. Whereas investments themselves may not be included in this exception, the profits from offering absolved individual property may be reinvested without fear of seizure by creditors.

Strategies to Protect Investments

While bankruptcy may include the liquidation of resources, there are techniques you can utilize to ensure your ventures and minimize misfortunes. Consider the following tips:

1. Maximize Exceptions: Take advantage of all accessible exclusions beneath New York bankruptcy law to shield your investments from lenders. Work with a learned bankruptcy lawyer to guarantee you utilize exclusions to their fullest extent.

2. Change over Non-Exempt Resources: If you have non-exempt resources that are at risk of bankruptcy, consider changing them into absolved resources or utilizing them to finance retirement accounts. By deliberately reallocating resources, you can ensure your investments whereas complying with insolvency requirements.

3. Investigate Chapter 13 Insolvency: If you're concerned approximately losing your ventures in Chapter 7 insolvency, investigate the alternative of filing for Chapter 13 insolvency instep. With Chapter 13, you can hold your investments while reimbursing lenders through an organized reimbursement plan.

4. Counsel with a Financial Advisor: Look for direction from a financial advisor to survey your investment portfolio and investigate procedures for securing your resources amid bankruptcy procedures. A financial advisor can give personalized advice custom fitted to your particular financial situation.


Filing for insolvency in New York isn't essentially the end of your future investments. By understanding the exclusions available under New York insolvency law and utilizing key measures, you can secure your ventures and secure your monetary future. Whether you select Chapter 7 or Chapter 13 insolvency, counseling with an experienced bankruptcy lawyer is pivotal for successfully and maximizing the assurance of your investments.