Bankruptcy Laws in Pennsylvania
The American people are guaranteed debt relief protection through the United States Constitution. The Bankruptcy Code is set by Congress, although each state has the right to adopt specific bankruptcy provisions. The area where most states differ from the federal Bankruptcy Code is in the allowable exemptions. You have reached this site because you are interested in the Bankruptcy Laws in Pennsylvania.
Each state reserves the right to amend the Bankruptcy Code as set forth by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. As such, the Bankruptcy Laws in Pennsylvania have been enacted.
Most states devise their adaptation of the Bankruptcy Rules with regard to exemptions. The Bankruptcy Laws in Pennsylvania allow the following:
- $300.00 in homestead property
- 100% wages and veterans’ benefits
- 100% clothing, sewing machines, books and bibles
The aforementioned exemptions apply to Chapter 7 bankruptcy. Chapter 7 is otherwise referred to as ‘liquidation’ bankruptcy. This means your non-exempt property and assets will be sold to pay off debt, beginning with secured debt. Any remaining unsecured debt will more than likely be discharged.
In order to qualify for Chapter 7, you must first pass the means test, which is a two part exercise. Part one compares the income of your family size to the median income in your state. As of May 2012, according to Bankruptcy Laws in Pennsylvania, the annual income table is:
- $44,555.00 for a single individual
- $53,763.00 for a family of 2
- $67,757.00 for a family of 3
- $77,867.00 for a family of 4
- For each additional family member, add $6,900.00
If you fall within these parameters, step two of the means test calculates your disposable income versus total debt. Take your monthly living expenses times twelve. Deduct that from your annual income to find your disposable income. Now multiply that number by 5. This is your disposable income over the next five years. Add up all current debt. Subtract that number from your total disposable income. If the difference is $7,025.00 or less, you more than likely qualify for Chapter 7 under the Bankruptcy Laws in Pennsylvania.
If you do not pass the means test you will file Chapter 13 bankruptcy. Under this chapter, you will retain all assets and make a reduced payment over the course of 3 or 5 years to pay off debt. Consult a qualified bankruptcy attorney before moving forward.