Many debtors in Pennsylvania file chapter 7 bankruptcy to totally wipe out debt, so a fresh economical start is possible. Chapter 13 is for the purpose of restructuring debt payments to a more affordable amount. Then, the debtor can pay off bills in 3-5 years and still have possession of any assets.
Pennsylvania Bankruptcy Topics
- Personal Bankruptcy Options
- Keep Your Home: Bankruptcy and Foreclosure
- Pennsylvania Exemptions to Bankruptcy Liquidation
- Options for Filing Bankruptcy
- Local Bankruptcy Courts and Trustees
Title 11 of the U.S. Bankruptcy code allows individuals to file straight bankruptcy under Chapter 7. Restructuring payment plans require filing Chapter 13 bankruptcy.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is for those individuals needing a fresh start. A means test determines whether the debtor really needs debt relief. Then, the court appointed trustee takes all qualifying assets and resells them to distribute money among creditors. All remaining debts that can be expunged are erased. The debtor now has a second chance to change financial fortunes. In the state of Pennsylvania, the average single individual earns $44,688; the family of two averages $53,011, and a household of three has approximately $67,262.
Chapter 13 Bankruptcy
Persons wishing to retain property, pay their bills, and receive a little help to make the payments more affordable, opt to file for Chapter 13 bankruptcy. The court negotiates with creditors to bring the debt down to a reasonable amount. Then, a payment plan is mandated to pay off debt with the next 5 years. As long as the debtor meets court expectations and keeps all other bills current, assets are kept. Nevertheless, the debtor cannot have more than $1,010,650 in secured debt and $336,900 in unsecured debt. (See more on Filing Chapter 13 in Pennsylvania).
If foreclosure procedures have been initiated, bankruptcy may not help a debtor retain property. While the process is delayed, the lien holder can request a lift of the stay, so the property is still sold to satisfy the debt. In some cases, Chapter 13 may allow the payments to be restructured, so the debtor can retain assets while getting a handle on debt.
Every state allows for asset exemptions. The Pennsylvania debtor can request the court withhold certain items from bankruptcy consideration. The chart below is a partial list of applicable exemptions:
Type of Asset(s)
Details on Applicable Exemption(s)
The only exception is property held in tenancy may be exempt from debts, if owed by only one spouse
Benefits for accident or disability, insurance policy with a cash value of $100 per month, life insurance proceeds if prohibiting clause specifically states the money cannot be used to pay off debts, group life, automobile insurance proceeds, fraternal or society benefits
Assets from business partnership
City, county and municipal employees, police officers, public school and state employees, retirement benefits specifically prohibited from paying off beneficiaries creditors, tax deferred exemption limited to $15,000-none, if deposited within a year of filing.
Uniforms and accessories, Bible, schoolbooks, sewing machine, clothing, and personal property sponsored by the U.S. Government at an International exhibit
Unemployment and workmen’s comp, veteran’s benefits, compensation for crime victims
All earned and unpaid wages
Use a Bankruptcy Lawyer
A bankruptcy lawyer helps the debtor to file all of the necessary documents with the court, ask for all applicable asset exemptions, answer any pertinent questions, offers learned legal advice, and provides moral support during very stressful proceedings. Costly mistakes will have adverse effects on the financial outcome of the case. Thus, a bankruptcy lawyer is strongly recommended.
Use a Filing Service
Unfortunately, a filing service cannot provide any legal advice or answer questions. In fact, they do not necessarily adhere to court requirements. Therefore, the debtor is left confused and in trouble with the court. No one is in the courtroom to offer advice or take the blame for costly document errors.
File “Pro Se”
Debtors opting to represent themselves file pro se. However, going to court alone is strongly discouraged. The legal ramifications are frequently costly. Unless the debtor is well versed on Pennsylvania law, potential exempts are forfeited and legal documents are forgotten, which could result in dismissal of the case.
Pennsylvania Eastern District Court Main Office
2609 James A. Byrne
United States Courthouse
601 Market Street
Philadelphia, PA 19106-1797
Pennsylvania Middle District Court Main Office
101 William J. Nealon Federal Bldg
and United States Courthouse
235 North Washington Avenue
Scranton, PA 18503
Pennsylvania Western District Court Main Office
3110 United States Post Office
700 Grant Street
Pittsburgh, PA 15219-1906