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Are Hurricane Sandy claims exempt in ch. 7 bankruptcy?

Bayshore, NY |

I need to file a ch. 7 bankruptcy in the Eastern District of NY. My home suffered a lot of damage in Hurricane Sandy a few months ago. I recently received a check from my insurance company for $26,000. The amount of damage was much more but this was all the insurance would pay. The money is in my bank account and I am having work done on the house. All the money will be used to repair the house but I need to file bankruptcy for credit cards. If I file bankruptcy now with a lot of that money in my bank account can the trustee take it?

Attorney Answers 4


  1. This money would be considered an asset. It is possible that Trustee would have a claim to at least a portion of it. Like any other asset you have what they call exemptions available. These allow you to keep property/ assets in varying types and amounts, which the Trustee cannot take. This can include some money in the bank. Also if you are married and filing jointly these amounts are doubled. You should meet with a local Bankruptcy attorney who can review your entire situation and properly advise you. Most offer free initial consultations.

    I hope this helps. Good luck.


  2. I suggest you repair the house first. If not the trustee will claim that amount as a cash asset with limited exemptions. Unless there is an urgent reason to file you should wait. Talk to a local bankruptcy attorney to discuss your specific issues.
    Howard E. Knispel, Esq.
    Commack, NY
    631-864-7589

    The above is a general answer and is not considered legal advice. You should contact an attorney before proceeding to take any legal action, signing any papers or upon service of a summons. Howard E. Knispel 631-864-7589


  3. You raise some tactical questions. Generally, those funds would fit into your homestead exemption, but some trustees might argue it is not. So it is safer to wait until the funds are paid out to actually become part of the homestead, rather than just money in the bank. You need to talk to a bankruptcy attorney who is familiar with how the court in your jurisdiction looks at this issue. Be sure to list your potential claim against the insurer for the balance of what you think it should pay as an asset of your bankruptcy.


  4. I agree with my colleagues. It would a lot safer to complete your home repairs prior to filing your BK. For a free consultation please call 1800 473 1581

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