In a Chapter 7 bankruptcy, not all property is subject to liquidation in order to pay creditors. Both federal bankruptcy law and Pennsylvania law provide for exemptions for various kinds of property, but before you can use them to best advantage you need to understand not only what they are but how they can be applied.
This post provides only an overview of bankruptcy exemptions. Identifying all applicable exemptions can be time-consuming and difficult to do on your own, and there is always the possibility that you may leave some uncovered. An attorney experienced with bankruptcy law can help you to not only find all appropriate Pennsylvania bankruptcy exemptions but can also help you to decide whether the state level or federal exemptions would be better for you.
The first consideration is to weigh the relative benefits of the available federal and state exemptions. Bankruptcy allows you to take advantage of either of these, but not both. Some of the bankruptcy exemptions available under Pennsylvania law include:
- The homestead exemption: Pennsylvania offers a "wildcard" exemption that can be applied to real property, but it is minimal. It amounts generally to $300, although for senior citizens it can be adjusted depending on income.
- Personal property exemptions: these can include exemptions for clothing, sewing machines and uniforms, as well as retirement funds and accounts and insurance proceeds.
- Public benefits exemptions: compensation for crime victims, unemployment compensation, workers compensation and veterans' benefits all have applicable Pennsylvania exemptions.
- Other exemptions: in addition to the wildcard exemption, some other miscellaneous Pennsylvania exemptions include property of a business partnership, earned but unpaid wages, wages of victims of abuse, and exemptions applicable to city, municipal, and state employees as well as police officers and public school employees.