Pennsylvania Bankruptcy Exemptions — What You Keep

Exemptions are the legal rules that determine what property you can keep when you file for bankruptcy. In Pennsylvania, exemptions are critically important because they define the line between protected and at-risk assets.

Pennsylvania allows debtors to choose between state exemptions and the federal bankruptcy exemptions under §11 U.S.C. § 522(d). An attorney can help determine which set protects more of your property.

Homestead

none — Pennsylvania has no homestead exemption. Pennsylvania has no dedicated homestead exemption statute; § 8123 is the general $300 exemption, which can be applied to any property of the judgment debtor, including real property. Pennsylvania debtors may generally be able to choose the federal exemptions under 11 U.S.C. § 522(b) instead of the state set — confirm with a lawyer. This protects equity in your primary residence — if your home equity is within this limit, you keep the house in bankruptcy.

Personal property

$300 aggregate in any property of the judgment debtor, including bank notes, money, securities and real property. Pennsylvania's personal property exemption is very limited. Specific items such as Bibles, school books, sewing machines, and uniforms may be additionally exempt. This covers household goods, furnishings, clothing, and everyday personal items.

Vehicle

included in $300 personal property exemption. This protects equity in your car — meaning the value of the vehicle minus what you owe on it.

Wages §42-8127

Wages, salaries and commissions are exempt from attachment while in the hands of the employer, except for divorce, support, board for four weeks or less, residential-lease damages, PHEAA education loans, and criminal restitution/fines/costs. This applies to wages already earned but not yet paid at the time of filing.

Wildcard

$300 (any personal property). A wildcard exemption can be applied to any property not fully covered by other exemptions.

Retirement accounts §42-8124

Retirement funds under IRC §§ 401(a), 403(a) and (b), 408 and 408A (including ERISA-qualified plans and IRAs) are exempt, except amounts contributed within one year before the bankruptcy filing, contributions in excess of $15,000 within a one-year period (direct rollovers from other exempt funds excepted from both limits), and amounts deemed fraudulent conveyances. Certain amounts payable under the Pennsylvania State Employees' Retirement System (SERS) and Public School Employees' Retirement System (PSERS) are exempt as provided by their retirement codes, subject to the Public Employee Pension Forfeiture Act. Retirement accounts receive strong protection in bankruptcy — both under state law and federal law §29 U.S.C. § 1056 (ERISA).

Tools of trade

uniforms and work equipment provided by employer are exempt; otherwise included in $300 personal property. This protects the equipment you need to earn a living.

• In Chapter 7, non-exempt property can be liquidated by the trustee. High exemptions mean you keep more.
• In Chapter 13, the "best interests of creditors" test means your plan must pay unsecured creditors at least what they would have received if non-exempt assets were liquidated in Chapter 7. Higher exemptions can reduce your required plan payment.

• Is your home equity within the homestead limit, or does it exceed the cap?
• Do you have a vehicle loan that reduces your equity below the exemption?
• Are there assets that could be reclassified or converted to exempt form before filing?
• Would waiting to file change the exemption calculation (e.g., recent large deposit, bonus, tax refund)?