If you're declaring bankruptcy, one of the main things you're probably thinking about is how you're going to be able to keep your home. You know that you could lose assets in the deal, and you want to be sure that your home is protected. There are a few things that you should know about this.
First and foremost, the homestead exemption in the state of Pennsylvania does not offer you as much as you may assume. This law is designed not to protect just the home, but the equity you have in it when your home is worth more than what you owe on your mortgage. However, a married couple can only claim an exemption of $300 under the homestead laws.
The law is a bit different for senior citizens. To determine how much they can claim, a sliding scale is used that is based around income up to $15,000.
You may find that federal bankruptcy exemptions give you a bit more of what you're after.
The homestead exemption at the federal level was $22,975 in 2013. It can be used on more than just a home, but also for a condo, a mobile home, a co-op, or a burial plot. Additionally, couples who are married are allowed to claim twice the amount, for a total of $45,950. You may also be allowed to keep your home, with factors like equity and exempt debt being taken into account.
It is worth noting that the federal laws mandate that you must have lived in the house for a minimum of 40 months before filing, though previously owned property that was sold to buy the current house can count.
Protecting your house and way of life is important. Make sure you carefully consider all options when filing for bankruptcy.
Source: FindLaw, "Pennsylvania Homestead Laws," accessed Aug. 04, 2016