Pennsylvania Homestead Laws

The thought of filing Chapter 7 bankruptcy can strike fear in the hearts of homeowners, who may believe that the bankruptcy trustee will automatically sell your house to pay your creditors. However, that’s not usually the case. Protections are in place to help filers keep their primary dwelling.

Most states offer a homestead exemption that protects a certain amount of equity in your primary residence. The amount of the exemption varies. However, Pennsylvania is one of only two states that don’t offer protection for your homestead property. Filers can still claim a homestead exemption under federal law.

This article explains your options for protecting your home in Pennsylvania, how much the federal homestead exemption is, and how you can apply it to your bankruptcy case. Bankruptcy law can be extremely complicated. If you’re considering filing for bankruptcy in Pennsylvania, it’s a good idea to retain an experienced bankruptcy attorney.

Pennsylvania Does Not Offer a State Homestead Exemption for Bankruptcy Filers

A homestead exemption can help homeowners protect their real estate during a bankruptcy filing. Pennsylvania homeowners can take advantage of the federal homestead exemptions. While this can improve your chances of keeping your home, it doesn’t guarantee it. If your home equity exceeds the federal exemption amount, the trustee may force a sale of your house to pay other creditors.

If you’re unsure how much equity you have in your house, getting a property assessment should provide an answer. It’s usually a required part of your bankruptcy petition anyway, so plan on having it done.

How the Homestead Exemption for Property Owners Works

When it comes to claiming the federal homestead exemption, your home’s value isn’t that important. The key to determining whether you can keep your permanent home is your equity. The homestead exemption protects only your home equity, not the house. If your home equity is less than the homestead exemption, the bankruptcy trustee has no reason to sell your home to pay your creditors.

When your equity exceeds the homestead exemption amount, the trustee may force a sale of your property and distribute the proceeds to your creditors. This is more likely in a Chapter 7 bankruptcy, which is a liquidation. Under Chapter 13, which is a repayment plan, your house isn’t likely to be sold unless you default on your payments. If you’re uncertain which type of bankruptcy you should be filing, consider speaking with a Pennsylvania bankruptcy lawyer before you file.

What Is the Amount of the Federal Homestead Exemption?

For the years 2025 through 2028, the federal homestead exemption is $31,575 per person. If you and your spouse file a joint bankruptcy petition, you can double the exemption to $63,150. The amount is the same regardless of which municipality your primary residence is located in. For instance, people in Philadelphia enjoy the same protection as someone with a farmstead exclusion in a rural area. The exemption amount is also the same whether you are 18 years old or a senior citizen.

Requirements and Limitations on the Federal Homestead Exemption

To claim the federal homestead exemption, you must meet the eligibility requirements. There are no restrictions based on your property’s acreage. The exemption amount is the same for rural and urban properties. As long as you meet the eligibility criteria, you can apply the exemption as part of your bankruptcy case.

The requirements for the federal homestead exemption include:

• The property must be your primary residence and must be owner-occupied. You can’t claim an exemption for rental property or a vacation home. The county assessor should be able to give you proof that your name is on the deed and that you pay the property tax bill.
• You must have lived in the home for at least two years before filing bankruptcy. You can provide proof by submitting documentation such as utility bills or school district registration.
• You live in Pennsylvania. You must actually reside there, not just pay real property tax.
• Each spouse must claim the exemption separately. If your spouse doesn’t qualify for the exemption, you can still claim it on your bankruptcy petition.

When you file your bankruptcy petition, you must include certain schedules. These provide the trustee with a list of your debts and assets. When you do this, you must state your intention to keep your home and claim the homestead exemption.

You must also advise the court how much equity you have in your home. A property appraisal allows the trustee to know the correct assessed value of your home.

What Types of Property Are Eligible for the Homestead Exemption?

The federal homestead exemption applies to almost all types of property. You don’t have to live in a single-family home to qualify for the exemption. You do have to prove that it is your primary residence.

In general, the following types of real property qualify as a homestead for bankruptcy purposes:

• Single-family home
• Condominium
• Mobile home
• Trailer
• Farm/barn

As long as the dwelling is where you live full-time, you shouldn’t have trouble applying the federal homestead exemption in your Pennsylvania bankruptcy case.

If you aren’t sure if your property is eligible for the exemption, consult an experienced Pennsylvania bankruptcy attorney. They will review your property description, deed, and other relevant information and let you know whether you can claim the exemption.

How To Claim the Federal Homestead Exemption in Your Chapter 7 Bankruptcy

Your homestead exemption claim must be part of your bankruptcy filing. To claim the federal homestead exemption in a Pennsylvania Chapter 7 bankruptcy case, take the following steps:

• File your Chapter 7 bankruptcy petition and list your home as an asset
• Claim the federal exemption for your primary residence on your Schedule C form
• Attach the necessary documents to demonstrate that the house or dwelling is your primary residence

If the trustee agrees you meet the exemption requirements, your home equity should be safe. The trustee will likely ask for proof that you are current on your mortgage. If you aren’t up to date, you may want to wait to file your bankruptcy until you are current. Alternatively, you may want to convert your Chapter 7 case to a Chapter 13 bankruptcy instead.

Disclaimer: State laws frequently change due to new legislation, higher court rulings, and other means. While FindLaw strives to provide the most current information, contact a local Pennsylvania bankruptcy attorney to verify your state laws.

Seek Legal Advice From an Experienced Pennsylvania Bankruptcy Attorney

If you’re thinking about filing for bankruptcy but worry about losing your home, consult a Pennsylvania bankruptcy lawyer. Filing for bankruptcy is difficult and can be frightening. A Pennsylvania bankruptcy lawyer can examine your situation, explain your options, and ensure your filing includes all necessary information and takes full advantage of the available protections.