A Chapter 7 bankruptcy debtor living in a residential rent stabilized apartment may forfeit his or her possession rights if a decision by Bankruptcy Judge in the Southern District of New York is upheld in the United States Court of Appeals for the Second Circuit. Which means if you file bankruptcy you may lose your rent stabilized apartment to your landlord who could buy those rights from the Chapter 7 trustee. Normally, when filing Chapter 7 Bankruptcy a debtor may keep exempt assets. Exempt assets are those assets that do not become part of the bankruptcy estate once a bankruptcy petition is filed. In other words, exempt assets are not surrendered to the Chapter 7 trustee to liquidate and pay your creditors like non-exempt assets are.
A recent holding in the Bankruptcy Court for the Southern District of New York, however, does not allow you keep your possession rights in a rent stabilized apartment. In the case of In re Mary Veronica Santiago-Monteverde No. 11-15494 (JMP) SDNY decided on April 10, 2012, Bankruptcy Judge James Peck held that “the benefit of paying below market rent is not a “public assistance benefit”that is entitled to any exemption in bankruptcy. It is a quirk of the regulatory scheme in the NewYork housing market, not an individual entitlement.” The issue of whether rights in a residential rent stabilized lease is exempt is currently on appeal in the United States Court of Appeals for the Second Circuit. Stay tuned.
A recent holding in the Bankruptcy Court for the Southern District of New York, however, does not allow you keep your possession rights in a rent stabilized apartment. In the case of In re Mary Veronica Santiago-Monteverde No. 11-15494 (JMP) SDNY decided on April 10, 2012, Bankruptcy Judge James Peck held that “the benefit of paying below market rent is not a “public assistance benefit”that is entitled to any exemption in bankruptcy. It is a quirk of the regulatory scheme in the NewYork housing market, not an individual entitlement.” The issue of whether rights in a residential rent stabilized lease is exempt is currently on appeal in the United States Court of Appeals for the Second Circuit. Stay tuned.
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