Money — 2 years ago

Pennsylvania Bankruptcy Laws

by Garry S.

Pennsylvania Bankruptcy Laws, Bankruptcy Laws Pennsylvania

Pennsylvania Bankruptcy Laws: What are the Laws regarding Bankruptcies in the State of Pennsylvania?

Becoming bankrupt in the United States is more common than you think. There are countless reasons why you are unable to keep up with your bill payments, which is affecting the quality of life significantly. A sudden job loss, high medical bills, and failed business are the most common factors which lead to people filing for bankruptcy.

As a result, creditors will start their collection practices, which can make your life difficult. If you choose to file for bankruptcy, it will bring you relief, as they can’t continue these activities.

However, not everyone is well-equipped when it comes to an understanding of the ins and outs of the laws regarding this situation. Knowing the laws regarding bankruptcies is essential, as they give you all the answers to your queries.

What are the types of bankruptcies in Pennsylvania? 

Chapter 7 in Pennsylvania

If you want to get rid of most of your debts, you should file for Chapter 7 bankruptcy. In this option, you no longer have to pay unsecured debts, such as medical bills and credit cards. Individuals and businesses can file for this, and it will take around three to four months to discharge the bankruptcy.

Pennsylvania Bankruptcy Laws

However, you will lose your non-exempt property, as the trustee will put them on sale. All the proceeds will go to the creditors, and the trustee will receive a cut. Chapter 7 is an excellent option for those who have low income and for people whose debt is greater than the value of their property.

Chapter 13 in Pennsylvania

Chapter 13 or reorganization bankruptcy, it is for debtors who earn an adequate income to pay off their creditors, after deducting living expenses. If you opt for this option, you will have to come up with a repayment plan to pay back your creditors within a stipulated time.

While you get to keep your non-exempt property, you will have to pay the creditors an amount equivalent to their value. Depending on the type of debt, expenses, and income, you may not have to pay the entire amount you owe as part of the repayment plan. 

Federal exemptions in Pennsylvania

When you file for bankruptcy in Pennsylvania, you can use the exceptions of the state. At the same time, you have the option of choosing from federal exemptions. While you can’t mix and match the two, you can use federal nonbankruptcy exemptions with the state’s laws. For example, they will help protect disability and retirement benefits for military and federal employees.

Bankruptcy Laws Pennsylvania

Joint bankruptcy in Pennsylvania

When you have a spouse, you have the option of filing for joint bankruptcy. As a result, you and your partner can get double the exemption for property that belongs to both parties. However, if only you or your spouse are sole owners, you won’t be able to make use of this option.

Pennsylvania – Community property

Pennsylvania doesn’t fall under community property, which means that you will be responsible for your spouse’s debts only if you associate with them voluntarily. For example, if you are a co-signer for a loan your spouse takes in his/her name, it becomes a part of your financial liability.

How to file for bankruptcy in Pennsylvania?

You need to head to U.S Bankruptcy Court website to obtain the forms. If you are going to file for Chapter 7, you need to pass the Means Test. It aims to find out if your family income is lower than the state’s median income. Also, you need to complete credit counseling and debtor education courses to receive a discharge. You need to pay $335 and $310 to file for Chapter 7 and Chapter 13 bankruptcies respectively. If you are unable to make the filing fees, you can ask for a waiver or break down the amount into installments for 


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