Can I Keep My Home or Car if I File for Bankruptcy in Pennsylvania?
Bankruptcy in Pennsylvania can be a daunting process, and many people worry about losing important assets like residences or vehicles. However, you may be able to keep certain assets during and after your bankruptcy. It makes sense to learn more about bankruptcy before you completely dismiss this possibility – and many of your fears could stem from a lack of understanding. To clear up misconceptions about bankruptcy, consider a consultation with a Pennsylvania bankruptcy lawyer today.
Many Assets are Exempt From Bankruptcy
Many assets are completely exempt from bankruptcy proceedings. Contrary to popular belief, you do not need to sell everything you own in order to satisfy your creditors. Many assets are completely untouchable, including retirement assets, a certain amount of jewelry, household furnishings, tools, and more. In Pennsylvania, your home and car may be exempt in certain situations.
How to Keep Your Home During a Pennsylvania Bankruptcy
First, you should know that two types of bankruptcy are particularly common in Pennsylvania: Chapter 7 and Chapter 13. Chapter 7 requires you to liquidate some assets while keeping others.
Your home could be completely exempt during Chapter 7 bankruptcy. Although Pennsylvania has no homestead exemption, the federal exemption allows you to keep $27,900 of your home’s equity – and this number increases each year based on inflation. In addition, you can easily double your exemption by filing for bankruptcy with your spouse – bringing the total exemption to well over $50,000.
You also need to consider your mortgage when determining whether you can keep your home. If you still owe money on your house, you can subtract this mortgage debt from the value of your home. For example, your home might be worth $300,000 on the market today. If you still need to pay $250,000 before the home is fully yours, this brings your home equity down to $50,000. This would fall below the home equity exemption for a Chapter 7 bankruptcy, allowing you to keep your property – even though it is worth $300,000.
How to Keep Your Car During a Pennsylvania Bankruptcy
It may be even easier to keep your car during a Pennsylvania bankruptcy. Again, you need to rely on the federal exemption, which is $4,450. If your vehicle is worth more than this amount, you may need to sell your car and purchase a new (probably second-hand) one that falls below the exemption. Although this could be difficult, it at least provides you with a method of transport during bankruptcy proceedings.
Can a Pennsylvania Bankruptcy Lawyer Help Me Keep My Assets?
It may be easier to keep your home and car than you realize – especially if you work with an experienced bankruptcy lawyer in Pennsylvania. These legal professionals can help you choose the right type of bankruptcy while protecting your assets. At Audi Law, we understand that bankruptcy can be a difficult process – and we can discuss your unique concerns during an initial consultation. Contact us today to get started.