Everyone experiences setbacks from time to time. But if your financial situation seems to have spiraled out of control, it may be time to consider filing bankruptcy. There are two main types for individuals, and both are protected by federal law. With Chapter 7, assets are sold, or liquidated, to pay creditors as much as possible. The remaining debts are wiped away, leaving you with a clean slate. Chapter 13 bankruptcy, on the other hand, does not erase debts, but rather reorganizes them into a repayment plan over a set period of time.
While there are federal laws governing bankruptcy, each state has its own rules and procedures as well. Those considering filing bankruptcy in Pennsylvania should bear in mind some key information.
Your Local Bankruptcy District
Pennsylvania has three districts for filing bankruptcy:
- The Western District, with locations in Pittsburgh, Eerie, and Johnstown
- The Middle District, with locations in Wilkes-Barre, Harrisburg, and Williamsport
- The Eastern District, with locations in Philadelphia and Reading
You must file in the district in which you live.
Eligibility for Chapter 7
Not everyone can file Chapter 7 bankruptcy. It is only available to those who earn less on average each month than Pennsylvania's median income. If you earn more than the median monthly income in Pennsylvania, you must be able to pass a stringent means test to qualify to file Chapter 7.
Duration of Chapter 13 Plans
Your average income is also a consideration when it comes to filing Chapter 13 bankruptcy. Those whose average monthly incomes are less than Pennsylvania's median monthly income can expect Chapter 13 repayment plans that do not exceed 36 months. In some situations, you may be able to prove good cause for extending that duration, in which case 60 months is usually the maximum. If you earn equal to or more than the median monthly income in Pennsylvania, you can generally expect a Chapter 13 repayment plan to last 60 months.
Bankruptcy Exemptions in Pennsylvania
Each state maintains a list of exemptions property that cannot be seized when you file bankruptcy. This ensures that you will still have basic necessities. The federal government has an exemption list, too. Pennsylvania gives you the option to use either the state's list or the federal list of exemptions. But you must stick to one or the other, you can't mix and match. So it is important to weigh the two options carefully. Some key differences include:
- Federal exemptions include real property valued up to $21,625. Pennsylvania, on the other hand, does not offer a homestead exemption. If a married couple owns a home, it cannot be seized because of one spouse's debts.
- Federal exemptions include a motor vehicle valued up to $3,450. Pennsylvania offers no motor vehicle exemption.
- Pennsylvania offers an exemption for earned but unpaid wages. There is no federal exemption for wages.
A Bankruptcy Lawyer Can Help
For more detailed, specific information relative to your current position, please contact a Pennsylvania bankruptcy lawyer.