Pennsylvania Bankruptcy Exemptions and Law

Many families live from paycheck to paycheck. Close to 30% of Americans report that they are either just getting by financially or struggling to pay their bills. It’s no surprise, then, that people continue to turn to bankruptcy to catch up and get much-needed debt relief.

Although federal law generally governs bankruptcy, states can pass their own bankruptcy laws. For example, each state decides whether people who file for bankruptcy can protect their home and other assets. State laws also dictate which assets are considered exempt in a bankruptcy filing.

In this article, we explain Pennsylvania bankruptcy laws, including who can file for bankruptcy and the requirements to file a bankruptcy case. We will also discuss the Pennsylvania bankruptcy exemptions.

If you’re thinking of filing for a Chapter 7 or Chapter 13 bankruptcy and aren’t sure what to expect, consider contacting a Pennsylvania bankruptcy attorney for help. It’s important that you file your bankruptcy petition correctly so you don’t have to refile your case later.

Pennsylvania Bankruptcy Law

All bankruptcy cases are governed by the U.S. Bankruptcy Code. The Bankruptcy Code is a set of rules and procedures the bankruptcy courts and trustees must follow when handling bankruptcy proceedings.

Federal law dictates some things, such as eligibility requirements to file bankruptcy. However, other rules, such as the amount of certain bankruptcy exemptions, fall under Pennsylvania’s bankruptcy laws.

In addition to the requirements for filing a liquidation or reorganization bankruptcy, federal law controls the application of the “automatic stay.” The automatic stay protects debtors from collection action by creditors whose debts are part of the Chapter 13 or Chapter 7 filing.

Requirements for Filing Bankruptcy in the State of Pennsylvania

The eligibility requirements for filing bankruptcy in Pennsylvania are the same as in other states. Of course, the requirements for Chapter 7 differ from those for a Chapter 13 bankruptcy case.

Generally, all debtors must cooperate with the bankruptcy trustee. For instance, they must provide the bankruptcy trustee with requested documents, answer the trustee’s questions honestly, and attend all scheduled meetings.

Chapter 7 Bankruptcy Filing Requirements

Chapter 7 bankruptcy debtors must also pass something called the “Means Test.” Under the means test, to qualify for Chapter 7 bankruptcy, you must earn less than your state’s median household income.

The exact threshold amounts are adjusted two to three times a year. It also depends on the size of your household. According to the U.S. Trustee Program, the current median household income for a two-person household in Pennsylvania is $87,534. For a four-person household, the median income level is $135,862.

You can use the means test calculator below to estimate whether you qualify for Chapter 7 in Pennsylvania.

Chapter 7 Means Test Calculator

Estimate your eligibility for Chapter 7 bankruptcy

If you don’t pass the means test, you may still qualify for Chapter 7 bankruptcy. The trustee will look to see what your disposable income is. If it falls below a statutory threshold, you may be eligible.

Your disposable income is what remains of your net income once you deduct your monthly living expenses.

Another requirement you must meet before you file your Chapter 7 bankruptcy petition is completion of a mandatory credit counseling course, submission of the appropriate bankruptcy forms, and payment of the requisite filing fee. (These requirements also apply to Chapter 13 bankruptcy.)

Note: If you cannot afford the filing fee, you can request a fee waiver or request that you pay the fee in four equal installments. The filing fee for a Chapter 7 is $338, and the fee for Chapter 13 is $313.

Chapter 13 Bankruptcy Eligibility Requirements

To qualify for Chapter 13, you must meet the basic eligibility requirements for bankruptcy. You must also meet other criteria. For example, you must prove that you have a sufficient regular income to make your Chapter 13 repayment plan payments.

One critical requirement for Chapter 13 filers is that their debts cannot exceed the federally imposed debt ceilings.

Your total debts must fall below the maximum limits listed below:

• Secured debt: $1,580,125
• Unsecured debt: $526,700

These qualifications are usually not a problem. If they are an issue, you should seek legal advice from a Pennsylvania bankruptcy lawyer who can offer alternatives, such as non-bankruptcy debt negotiation.

What is the Automatic Stay?

The automatic stay is a big part of bankruptcy protection. It is the one thing that stands between bankruptcy filers and their creditors.

According to Section 362 of the Bankruptcy Code, a bankruptcy petition automatically stops adverse actions, such as:

• Foreclosure
• Creditor harassment
• Eviction
• Wage garnishment
• Repossession
• Sheriff’s sales
• Bank account levy

In Chapter 7 cases, the automatic stay remains in effect until the bankruptcy court issues your discharge. In Chapter 13 cases, the automatic stay protects you until you complete your Chapter 13 plan. This can take anywhere from three to five years, depending on your income level.

What Happens to Your Debts in a Chapter 7 Bankruptcy Case?

One reason people call Chapter 7 a liquidation bankruptcy is that, at the end of your case, the court will discharge most of your debts, and you may have to sell some of your assets. That is why it is crucial to understand the available bankruptcy exemptions. You can use these exemptions to protect some or all of your equity in your home and other assets.

Once the bankruptcy judge discharges your debts, you no longer owe them, and your creditors can no longer attempt to collect them.

Some of the common debts that are dischargeable when you file Chapter 7 bankruptcy include the following:

• Medical bills
• Car payments (if you surrender your motor vehicle)
• Payday loans
• Credit card debt
• Personal loans
• Older tax debts (in some cases)

The U.S. Bankruptcy Code also deems some debts non-dischargeable. These include:

• Student loans
• Mortgage payments
• Recent tax debts
• Child support
• Alimony
• Criminal restitution
• Debts arising out of fraud or other crimes

Now, just because bankruptcy will not relieve you of the above debts, that doesn’t mean you will automatically lose your home or motor vehicle. The exemption laws provide for certain levels of protection for bankruptcy filers.

Pennsylvania Bankruptcy Exemptions

Every state has its own set of bankruptcy exemptions. Some jurisdictions, such as the District of Columbia, are more generous than others. In Washington, D.C., for example, the homestead exemption is unlimited. D.C. residents can protect all the equity in their home, no matter how much it is.

Other states, like Pennsylvania and New Jersey, are not so generous. These are the only two states that do not offer a state homestead exemption in bankruptcy. This means property owners with equity in their principal residences tend to choose federal bankruptcy exemptions, since that’s the only way to protect their home.

While Pennsylvania doesn’t offer a homestead exemption, that doesn’t mean the state doesn’t offer some bankruptcy exemptions. However, they are negligible when compared to the federal bankruptcy exemptions.

Pennsylvania’s property exemptions are as follows:

• Wildcard exemption (can apply to any property): $300
• Motor vehicle: $0
• Jewelry: $0
• Tools of the trade: $0
• Personal property: $0 (with the exception of schoolbooks, clothing, Bibles, sewing machines, and work uniforms, which are completely exempt)

The above amounts are either zero or very low. This is why so many Pennsylvania residents choose the federal exemptions over the ones offered by the state.

There are some types of property and assets that are safe, regardless of the type of bankruptcy exemptions available to you. Some of these include:

• Retirement accounts
• Pension
• Money you receive in a personal injury case
• Unemployment compensation
• Social Security and disability benefits
• Veterans’ benefits
• Government benefits
• Current wages

While it is helpful to have full protection for the above items, it does not go far in giving you the fresh start you are seeking when you file bankruptcy. When you first meet with your Pennsylvania bankruptcy attorney, they will review your financial situation and explain which set of exemptions makes more sense for you.

Federal Bankruptcy Exemptions

If you are filing a no-asset Chapter 7, the state exemptions may work for you. However, most Pennsylvanians select the federal exemptions. They offer much more protection, and the exemption amounts are doubled for married couples.

Some of the pertinent federal bankruptcy exemptions you can claim for your nonexempt property include:

• Homestead: You may protect up to $31,575 in home equity. This increases to $63,150 for married couples filing jointly. If your home equity is less than this amount, the trustee cannot sell your home. Your Pennsylvania bankruptcy lawyer can unlock some advanced options, such as a tenancy by the entirety, which stretch this exemption further.
• Motor vehicle: The federal exemption for your car or SUV is $5,025 per person. Each individual debtor can only claim this exemption for one vehicle. This means that, if you have less than $5,025 in equity in your motor vehicle, it will be protected in bankruptcy.
• Personal property: There are specific maximum amounts you can exempt under the federal exemptions. For example, you can protect up to $2,125 in jewelry, a total of $16,850 in personal property/household goods, and $3,175 in tools of the trade.
• Wildcard exemption: The federal wildcard exemption is much larger than the $300 available under Pennsylvania state law. As of 2026, the federal wildcard exemption is up to $17,475. This includes a general wildcard exemption of $1,675 and up to $15,800 of your unused homestead exemption you can apply to other property.

Your Pennsylvania bankruptcy lawyer will sit down and go over the exemptions and how they apply to your case. There is a strong chance that you will opt for the federal exemptions when you realize just how little the state exemptions protect.

Contact a Skilled Bankruptcy Attorney Before You File Your Petition

Deciding to file bankruptcy is never easy. However, if you’re drowning in debt and desperately need a fresh start, you aren’t alone. Many people rely on Chapter 7 bankruptcy to eliminate their debts so they can start over. Others file a Chapter 13 case because they want to keep their assets and earn too much to qualify for Chapter 7.

Before you file your petition, you should contact an experienced Pennsylvania bankruptcy lawyer. They will make sure you file all the proper bankruptcy forms and supplemental documentation, such as your recent tax returns and schedules.

Your attorney will also stand by you in federal court when you attend your “Meeting of Creditors” on the way toward concluding your bankruptcy case.