Protecting Assets

Many people are afraid they will lose all their property if they file for Chapter 7 bankruptcy. Recognizing that a fresh start would not be very valuable if you didn’t have at least basic possessions, the law allows you to protect a certain amount of your property—enough so that you can start over. “Exemptions” allow you to protect your property from being sold to pay back your creditors. Protecting assets is one of many aspects of bankruptcy that is made easier with the help of an experienced Levittown attorney. Talk to John M. Kenney about the bankruptcy strategies that might fit your situation.

Bankruptcy exemptions allow you to protect basic necessary property from creditors when you file under Chapter 7. When you file for bankruptcy in Pennsylvania, you can choose to protect your property using either Pennsylvania’s own exemption system or the federal bankruptcy exemptions. You cannot pick and choose which exemptions you want to take. You must choose one system and take all your exemptions from that system.

If you are married and filing a joint bankruptcy, both you and your spouse can each claim a full exemption amount of your property. However, you can claim the exemption only for property that belongs to you. If property belongs only to your spouse, you cannot double that exemption.

One of the biggest concerns debtors have is for their houses. In the Pennsylvania exemption system, there is no specific homestead exemption as there is in other states, but you can choose the federal bankruptcy exemption system, which does provide that protection, if you are a homeowner. Under the federal bankruptcy exemption system, an individual can protect equity in his or her home up to $22,975. This amount can be doubled if you are married and own your home together, so that you can protect $43,250 of equity in your home. Your home can be a house, condo, mobile home, or burial plot.

Pennsylvania also doesn’t have a specific exemption for motor vehicles. Instead, you can protect the equity in your car, motorcycle, truck, or other vehicle using the “wild card” exemption, if you elect the Pennsylvania system. Pennsylvania has a wildcard exemption of $300 that can be used to protect any property. You can protect more equity in your car by using the federal bankruptcy exemptions, which is $3,450 of equity in your car. If the equity in your car is less than whatever the available exemption amount is, the car cannot be sold to repay creditors. However, if the equity in your car is a lot more than the exemption amount, it is likely the car will be sold to repay creditors. If you and your spouse want to save a single car, you can double the federal motor vehicle exemption to keep up to $6,900 in equity in your car.

Personal property like religious texts, sewing machines, schoolbooks, and clothing are exempt in the Pennsylvania system. 75% of your wages are exempt. Your pension is protected. Your private retirement benefits are protected up to $15,000 if they were deposited one year before filing for bankruptcy. Insurance payments up to $100 per month are protected, as are life insurance proceeds when the policy prevents proceeds from being used to pay off debts. Public benefits are also protected.

Protecting assets in Bucks County can be more easily accomplished with the help of an experienced attorney who can help you decide which exemption system serves your needs. Contact diligent lawyer John M. Kenney for help filing for bankruptcy. You can reach him by phone at (215) 547-3031, or by submitting an online form. We serve clients throughout Pennsylvania, including in Bristol, Morrisville, Fairless Hills, Yardley, and Langhorne.