Bankruptcy Exemptions in Pennsylvania

The first question most people ask when they consider filing for bankruptcy is, what property can I keep. The good news is, in many cases, most or all personal property can be kept by someone who qualifies for a Chapter 7 bankruptcy. That is because of both federal and state exemptions that protect vital personal property from liquidation to satisfy creditors.

In Pennsylvania, filers are allowed to choose either state or federal exemptions, although they cannot mix the two. In addition, in most situations, couples filing jointly may double their exemption amounts, providing even more protection. It is important to note, however, that there are some debts that cannot be erased through Chapter 7 bankruptcy, such as some student loans, tax debts, alimony payments, and child support.

How to Keep Your Car

State and federal exemptions differ in this area:

• Federal exemption – $3,225
• Pennsylvania state exemption – none

While there is a federal exemption to help consumers retain their vehicles, if the consumer has a loan secured by that vehicle and the debtor misses payments or defaults, the lien holder is entitled to repossess the vehicle.

How to Keep Your Home

• Federal homestead exemption - $20,200
• Pennsylvania state exemption – none

As with an automobile, if there is a mortgage on the homestead that is secured by that property, the homeowner must continue to make payments or face foreclosure because of the lien.

The federal exemptions for personal items vary, depending on the item.

Pennsylvania allows exemptions for other forms of personal property:

• Any property – up to $300
• Clothing, Bibles, school books, sewing machines (not for commercial use), uniforms, and accoutrements

Filing Schedule C of a Bankruptcy Petition

In order to claim the property exemptions to which they are entitled, Pennsylvania residents must complete Schedule C of a bankruptcy petition to indicate whether they are claiming state or federal exemptions, as well as the specific items claimed, by supplying the following information:

• The property claimed
• The federal or state statutes substantiating those claims
• The property exemption value for each claim
• Each claim’s current assessed value (not the market value)

Get Advice from a Local Attorney First

Having a choice of exemption standards, as Pennsylvania residents have when filing for Chapter 7 bankruptcy, is always a benefit. However, it can also make the petition more difficult to determine, especially for those without a strong legal background. Bankruptcy lawyers understand those difficulties and have the experience and expertise to guide you through the process, providing the greatest benefit for you in your financial situation.