What Property is Exempt from Liquidation in a Chapter 7 Bankruptcy in Pennsylvania?

 For most people, one of the most frightening aspects of contemplating filing for Chapter 7 bankruptcy lies in not knowing what to expect or which of their personal assets they will be able to hold onto versus which they can expect to lose. In the state of Pennsylvania, the laws are very clear regarding what property you are able to protect from your creditors and which debts you will not be able to erase, and at Erik B. Jensen and Associates, we will take all the time you need to make sure that you understand how those laws apply to you.

When a person files for bankruptcy they give themselves a fresh financial start by having the majority of their debts wiped out. A debtor is able to keep exempt property that they would otherwise have lost to those to whom they owe money. Property that is not exempt can be taken by their creditors, either through repossession or by being sold and the money distributed to the creditor.

Pennsylvanians considering filing for Chapter 7 bankruptcy are able to choose whether they want to use the exemption statutes that have been established by the federal government or those that have been established by the state.  In most cases, the federal exemptions end up being more beneficial than the state laws. There are also some federal exemptions that can be used in addition to those established by the state.

The state of Pennsylvania permits you to exempt workers’ compensation benefits, disability insurance payments, pension accounts and retirement accounts. The federal exemptions allow those who file for Chapter 7 bankruptcy to keep:

  • $23,675 of the equity that you have built in your home
  • $3,775 equity in your vehicle
  • $600 per item in any household goods up to a total of $12,625
  • $2,375 in items that you need in order to perform your job. This can include tools, books, etc.
  • $1,600 in jewelry
  • $1,250 in other property up to $11,850 of any unused exemption in your home

All of these exemption amounts are doubled for married couples who file for Chapter 7 bankruptcy together. It is important to remember that you will not be able to hold on to property or money that is not considered exempt, and that you will also not be able to hold on to assets that you have accumulated within 180 days of your bankruptcy filing.

There are certain debts that are not eliminated by filing for Chapter 7 bankruptcy. These include money owed for child support or alimony, fines and property settlements, some taxes, and debts not listed on your bankruptcy petition. You also cannot eliminate student loans owed to a school or government body, debts for deaths or personal injuries resulting from driving under the influence, or loans you got fraudulently.

It can be difficult to understand how these numbers and rules apply to your specific situation, but the attorneys at Erik B. Jensen & Associates can help. Call us today to get the benefit of our experience and knowledge.