The idea of filing for bankruptcy is extremely stressful, especially when you’re faced with the very real possibility of losing assets.  Though there are certain exemptions available, the state of Pennsylvania has particularly strict rules regarding exemptions. It’s important for any Pennsylvania resident filing for bankruptcy to work with an attorney who truly knows and understands the rules and who can guide you through the process.

When an individual who lives in Pennsylvania files for bankruptcy, they have the choice of using either the federal bankruptcy exemptions or the ones offered under Pennsylvania’s state laws. Though you’ll want to review the details, there’s a good chance that the federal exemptions will allow you to hold on to more of your belongings. Though you can’t choose both federal and Pennsylvania exemptions, if you choose Pennsylvania’s exemptions you will still be able to take advantage of non-bankruptcy exemptions.

Pennsylvania residents who file for bankruptcy have a few advantages available to them under state rules. For example, couples who file their income taxes jointly can each claim the full amount of the exemption as long as they both have ownership interest in the property that they are trying to exempt.

Also referencing spouses, Pennsylvania offers no homestead exemption, though the equity in your home cannot be liquidated to repay debts of just one spouse.

Beyond that, Pennsylvania’s most commonly-used exemptions include:

• The Wildcard exemption, which allows up to $300 of any personal property other than real estate, or $300 cash.
• Personal property including your clothes or uniforms, school books and bibles, and sewing machines
• Any unpaid wages that you have earned or compensation for having been a victim of abuse or crime
• Tax-exempt retirement accounts including 401(k) accounts, 403(b) accounts, profit-sharing and money purchase plans, SEO and SIMPLE IRAs and defined benefit plans
• IRA and Roth IRA accounts up to a maximum amount
• Pension accounts for county, city, state or public school employees, police officers, municipal employees
• Any private retirement benefits whose plan specifically indicates that proceeds cannot be used to pay creditors
• Workers’ compensation and unemployment compensation
• Veteran’s benefits or benefits for the veterans of the Korean conflict
• Many insurance policies or their proceeds.
• Business partnership property
• Applicable federal nonbankruptcy exemptions

Understanding what you can keep and what you will lose is an important part of knowing whether moving forward with a bankruptcy is right for you. For assistance, contact our office today to set up a time for us to discuss your situation.