Pennsylvania’s Bankruptcy Exemptions
With Chapter 7 bankruptcy in Pennsylvania, your exemptions will depend on what property your state allows you to keep. Exempt property can be kept during and after bankruptcy. However, if the property is nonexempt, a trustee will have to sell it to pay off their debts.
What Is an Exemption?
Bankruptcy exemptions are a vital part of Chapter 7 bankruptcy. These exemptions are what decides what property you get to keep and what property will be taken and sold. Exemptions vary from state-to-state and can range anywhere from exemptions on your disability benefits to exemptions upon your clothing. If something a person owns is exempt from bankruptcy, it will not be taken.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy, also known as straight bankruptcy or liquidation bankruptcy, is the form of bankruptcy that involves a trustee and assets. To qualify for Chapter 7 bankruptcy, the person applying has to have an income that is less than their state’s median income, no disposable income, and a severe debt that is more than half of their annual income.
A person filing for Chapter 7 will have a trustee appointed to oversee their case. This trustee must take your assets, sell them, and then distribute the money accordingly. One of the biggest cons of Chapter 7 bankruptcy is that you will lose your property and luxury possessions, such as your second home or family heirlooms. Chapter 7 bankruptcy can also stay present on your credit report for 10 years or less.
Asset Exemptions in Pennsylvania
Exemptions to assets vary from state-to-state. Many states will allow you to keep most of the things that you own. For a single person filing for Chapter 7 bankruptcy, their state exemption is $300. A couple filing for Chapter 7 will have a state exemption of $600. 75% of the filer’s wages are also protected.
In regards to exemptions for a homestead, a person has none. Even so, property that is held as tenancy by the entirety of the household may be exempt against debts owed by one spouse. Social security, unemployment, welfare, disability, and accident benefits are also exempt. As for personal property, a person may keep their bible, schoolbooks, sewing machines, clothing, uniforms, and accouterments.
Also, under the federal exemption, you are allowed to have up to:
- $17,425 in real property that is used as a primary residence
- $2,775 of the total cost of a motor vehicle
- $450 on household furnishing up to a total of $9,300
- $925 additional personal property exemption, up to a total of $8,725
Finally, there is a wild card exemption that allows the filer to keep $300 of any property. For example, if someone has $300 worth of family heirlooms that they would like to save from being liquidated, they may keep them. Anything over $300 is taken.
Bankruptcy Help in Pennsylvania
Comprehending bankruptcy and foreclosures is no easy task. You may find it hard to understand which of your belongings or properties are exempt and which are not. Bartifay Law Offices has been helping residents in the Pittsburgh area since 1993. With our experience in foreclosure and bankruptcy, our Pennsylvania lawyers can help you understand the process of exemption and what you are legally able to keep. Our lawyers may even be able to help you find options around exemption that will give you the option to avoid foreclosure or filing for bankruptcy. With our help, filing for bankruptcy will become easy to understand and less of a stressful process.