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Bankruptcy exemptions in Pennsylvania

Pennsylvanians who are considering filing bankruptcy are often concerned about whether they will lose their property. In a Chapter 7 liquidation bankruptcy, debtors are likely to lose some of their possessions, which will be sold by the trustee to pay a portion of the owed debts. However, many categories of property are specifically exempted from inclusion in the bankruptcy estate, meaning they will not be sold and the debtor will be able to retain ownership.

When a person files for bankruptcy, he or she will be able to choose whether to file using the federal or state exemptions. The federal bankruptcy exemptions include up to $20,000 in the value of a home, a vehicle worth up to $3,225 and certain amounts of personal property such as jewelry, clothing, home furnishings and others. A wildcard exemption can also be used for property that does not fit into any of the categories or to protect specific items that exceed the maximum value. There are caps on all of the value amounts for the property exempted.

Pennsylvania does not have a homestead exemption. If the property is owned jointly with another person who is not filing bankruptcy, it may still be protected. About 75 percent of wages will be protected, as will certain types of pensions for public workers or amounts of retirement accounts.

There are numerous available exemptions. When deciding which exemptions to claim, people may want to consult with a bankruptcy attorney. An attorney may be able to provide guidance about the federal and state exemptions and which would be best for his or her client's individual circumstances. As Chapter 13 may allow some people to keep property while they make payments, it might be an option for those with non-exempt holdings.

Source: Public Library of Law, "Unofficial Purdon's Pennsylvania Statutes," Accessed on Jan. 27, 2015

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