Bankruptcy Judge James Peck
Living in a rent-stabilized apartment, Santiago-Monteverde (debtor) sought Chapter 7 bankruptcy protection in 2011, listing the unexpired lease as an executory contract. After the trustee informed her of his intent to sell the lease to the landlord, the debtor filed amended schedules recharacterizing the lease as personal property, electing New York’s exemptions pursuant to 11 USC §522(b)(3) and claiming an exemption for the value of the lease under N.Y. Debtor and Creditor Law (DCL) §282(2). The trustee moved to strike the claimed exemption as impermissible. On an apparent issue of first impression, the court held that the value of the debtor’s rent-stabilized lease did not qualify as an exempt “public assistance benefit” under DCL §282(2), and remained estate property. Because the lease was an estate asset that can be sold for value, it differed from other items included in DCL §282(2). Thus it was not a “public assistance benefit.” The differential between rent payable with respect to a rent-stabilized unit and a comparable unregulated unit can be monetized in bankruptcy and is not properly compared with the right of a qualifying individual debtor to receive a public assistance payment.