Alfred Abel Discusses Pennsylvania Chapter 7 Bankruptcy Exemptions

Learn About How Chapter 7 Bankruptcy Exemptions Can Protect Certain Property

As a Philadelphia bankruptcy attorney, one of the most common questions I am asked involves Chapter 7 bankruptcy exemptions. While the concept of debt relief through bankruptcy is relatively straightforward, understanding the rules surrounding what property and assets you will be permitted to keep can be complicated.

Bankruptcy Exemptions Allow You To Keep Certain Assets

When properly filed, a Chapter 7 bankruptcy allows certain assets and possessions to be exempt from liquidation, subject to meeting specific requirements. In Pennsylvania, state law allows a debtor filing bankruptcy to have the choice between two sets of bankruptcy exemptions:

  1. state bankruptcy exemptions set forth under Pennsylvania state law
  2. the federal bankruptcy exemptions under the U.S. Bankruptcy Code

Determining the assets and possessions you may keep in a Chapter 7 bankruptcy will depend on which set of exemptions you choose: either federal or state. Whether you are married or single will also impact the dollar amount of exemptions available to you.

Pennsylvania Bankruptcy Exemptions Under Chapter 7

If you select the Pennsylvania bankruptcy exemptions, the following property is exempt from liquidation:

  • Homestead: Real property held as ‘Tenancy by the Entirety’ may be exempt against debts owed by only one spouse.
  • Insurance benefits: fraternal benefit society benefits, group life insurance policy or proceeds, insurance policy or annuity contract payments where insured is the beneficiary cash value or proceeds up to $100/month
  • Miscellaneous property of business partnership
  • Pensions: limited to $15,000 per year deposited for private retirement benefits to the extent tax-deferred; no exemption for amount deposited within 1 year of filing for bankruptcy
  • Personal Property: bibles, schoolbooks and sewing machines (personal use only), clothing, uniforms and equipment (as provided by 51 Pa.C.S. § 4103)
  • Public Assistance benefits: unlimited
  • Crime victim compensation: unlimited
  • Disability benefits: unlimited
  • Veterans benefits: unlimited
  • Unemployment benefits: unlimited
  • Wages: earned but unpaid wages
  • Wild card exemption: $300 of any property

Federal Bankruptcy Exemptions Under Chapter 7

The federal bankruptcy exemptions are updated every three years on April 1st and adjusted to account for inflation. The figures effective as of April 1, 2019 are provided below. For married couples filing a joint bankruptcy the figures below can be doubled.

  • Homestead: Up to $25,150 in equity in real property
  • Automobile: $4,000 in equity for vehicles (must be current on car loan payments)
  • Crime victim compensation: unlimited
  • Disability benefits: unlimited
  • Medical/Health devices: unlimited
  • Household goods: $12,625
  • Jewelry: $1,700
  • Personal injury awards: $23,675, with some exceptions
  • Public Assistance benefits: unlimited
  • Retirement accounts: – unlimited (IRA and Roth IRAs up to $1,362,800)
  • Social Security benefits: unlimited
  • Tools of the trade: $2,525
  • Unemployment benefits: unlimited
  • Veterans benefits: unlimited
  • Wildcard exemption: $1,325, plus up to $12,575 from any unused portion of the federal homestead exemption

Determining the Right Bankruptcy Exemptions Requires Trusted Legal Counsel

Because you can only choose one set of exemptions, it is important to explore your options in detail with an experienced Pennsylvania bankruptcy attorney. Making the wrong decision can mean the difference between losing and keeping a property important to you.

Alfred Abel Law Offices Provides Skilled Bankruptcy Counsel

The attorneys at Alfred Abel Law Offices are dedicated to providing their clients in Pennsylvania and the surrounding areas with practical and effective legal advice. With more than 30 years of practice in bankruptcy law, Alfred Abel, Esq. has the critical expertise and skills to meet the diverse needs of clients facing bankruptcy and provide the guidance you need regarding bankruptcy exemptions. Contact us at 215-517-8300 for more information or to schedule a consultation.