Filing for bankruptcy is not a decision to be taken lightly, but for many Pennsylvanians, it’s a useful tool to get back on track financially.
For those who are considering filing for bankruptcy, it’s important to understand what will be expected of you.
Official Forms
Several forms need to be filled out and submitted to the U.S. Bankruptcy Court before your case can be started. Make sure that you have all of the appropriate financial documents on hand:
- Tax returns
- Income documentation
- Vehicle registration and proof of insurance
- Retirement and bank account statements
- Mortgage statements
Other financial documents may also be required. Your attorney can advise you of which documents you will need.
Means Testing and Credit Counseling
Depending on the type of bankruptcy you’re filing for, you may need to take a “means test” and undergo credit counseling.
The most updated information on means testing can be found on the U.S. Trustee’s website.
Means Test
If you’re planning to file Chapter 7 bankruptcy, the “means test” will determine whether you qualify. Some of the same information is used for Chapter 13 bankruptcy filings.
The means test will be included in the packet of forms you need to fill out and file with the bankruptcy clerk. The test is comprised of three forms, but you may not be required to complete all of them.
Essentially, the test will look at your income to determine whether you truly have enough disposable income to pay off your debts. If not, then you should qualify for Chapter 7 discharge. If so, then you’ll need to consider Chapter 13.
A bankruptcy attorney in Philadelphia can help you fill out these forms and guide you through the process.
Credit Counseling
In most cases, bankruptcy filers have to undergo two education classes before they are approved for discharge. One class is taken before the filing, and the other class is taken after the filing.
The U.S. Trustee’s website provides a list of approved providers in Pennsylvania.
Bankruptcy Exemptions in Pennsylvania
Pennsylvania, like many other states, does have exemptions that allow you to protect your property, such as homes, vehicles or cash.
If filing for Chapter 7 bankruptcy, you will be able to keep items that are protected by the state’s bankruptcy exemptions. If filing for Chapter 13 bankruptcy, you will need to pay for the value of non-exempt property to creditors as part of your plan.
In Pennsylvania, you have the option of choosing either state exemptions or federal exemptions – you cannot mix and match. Federal nonbankruptcy exemptions can be used to protect certain property regardless of whether you choose state or federal exemptions.
Exemption amounts are doubled for communal property when married couples file together.
Pennsylvania does not have a homestead exemption. However, married filers may be able to protect their home equity if the home is owned as a tenancy by the entirety. A home may also be protected if the filer chooses the federal bankruptcy option.
Bankruptcy exemptions in Pennsylvania include (but are not limited to):
- Pension and retirement funds for: police officers, city employees, county employees, state employees, municipal employees, public school employees, and private annuity, pension or retirement benefits.
- Property and wages: wages held by employers, $300 of property or cash, certain types of partnership properties, and clothing, uniforms, sewing machines, school books and religious texts.
- Public benefits: veterans’ benefits, workers’ compensation, unemployment compensation, crime victims’ compensation and Korean conflict veterans’ benefits.
Bankruptcy is a complex process that can be difficult to navigate on your own. A bankruptcy attorney in Pennsylvania can explain the process and guide you through each step.
