Will I Lose My Home if I File for Bankruptcy?

Many people are fearful about bankruptcy for understandable reasons. One of the greatest fears for many Pennsylvania residents is the threat of losing their homes. But is this really possible when you file for bankruptcy in Hershey? Do legal protections in Pennsylvania prevent creditors from taking your primary residence? These are questions you might want to explore with a bankruptcy attorney.

What is the Homestead Exemption During a Pennsylvania Bankruptcy Filing?

When you file for Chapter 7 bankruptcy in Pennsylvania, you will need to liquidate some of your assets. After you liquidate your assets and pay off your creditors, you will receive a “discharge.” In other words, you will no longer be liable for your debts, even if you cannot liquidate enough assets to cover these liabilities. As long as you follow the rules of the bankruptcy code and liquidate all “nonexempt” assets, you can start fresh and eliminate your debts.

Certain assets are “exempt” from this liquidation process, and your family home is an obvious example. This “homestead exemption” is designed to ensure you have a roof over your head, no matter how troubling your financial situation becomes. However, this exemption has notable limits in the Keystone State. In fact, Pennsylvania does not have a state homestead exemption, and you’ll have to rely on the federal exemption instead. As of 2025, the federal homestead exemption is almost $32,000. You can also take advantage of an additional “wildcard exemption” of almost $2,000. These exemptions rise every three years based on inflation.

What if the Homestead Exemption Does Not Cover My Home?

The problem is that the average home price in Pennsylvania is almost $300,000, or roughly ten times the federal homestead exemption. So, how do you keep your home when filing for bankruptcy in Pennsylvania? One option is to choose Chapter 13 bankruptcy instead of Chapter 7 bankruptcy, as the former involves a “repayment plan” rather than the liquidation of assets.

An experienced lawyer can also help you explore many other strategies to keep the roof over your head. First, Pennsylvania law gives you an automatic stay on foreclosure proceedings during the bankruptcy process. During this time, residents can explore alternative strategies to keep their homes.

Many of these strategies involve marital property law. If your home is jointly owned by you and your spouse, you may be able to protect it from creditors through certain exemptions or ownership structures. Sometimes, the only required step is to transfer full ownership of the family home to your spouse. Another step might involve a revocable trust.

Can a Bankruptcy Lawyer in Hershey, Pennsylvania, Help Me Keep My Home?

A bankruptcy lawyer in Hershey, PA, may be able to help you file for bankruptcy without losing your home. Thanks to the federal homestead exemption and other legal protections, you may be able to keep a roof over your head in this situation. However, each family’s situation is slightly different, and it makes sense to discuss your unique circumstances with a lawyer. Expand upon this discussion by contacting Audi Law PLLC today, online or at 717-707-5611.