If you own a home, you may worry about whether you can keep the property if you file for bankruptcy. The answer depends on your state of residence since each provides its own list of assets that remain exempt in a bankruptcy filing.
Learn more about protecting your home if you file for bankruptcy in Pennsylvania.
The federal homestead exemption
Pennsylvania does not have a homestead exemption. For this reason, people who file for Pennsylvania bankruptcy often choose to use federal bankruptcy exemptions instead of state exemptions. If you choose the federal route, you can protect up to $25,150 in real estate holdings including traditional homes, co-op properties, mobile homes and even burial plots. You can also use up to $12,575 of the federal homestead exemption toward other types of property.
If you decide to use the federal homestead exemption, however, you must use all the federal exemptions. You cannot mix and match between state and federal exemptions.
Property owned with a spouse
If you and your spouse own a home together and only one of you plans to file for bankruptcy, the property will be exempt. Pennsylvania will not require a couple to sell the home to repay debts accrued by just one spouse.
If this scenario applies to your situation, you can use either the federal or state bankruptcy exemptions. Pennsylvania allows you to keep clothing, books, earned wages, pensions, qualifying retirement accounts, veterans benefits and up to $300 in a wildcard exemption. For most Pennsylvania residents, it makes more sense to go with the more generous federal exemptions.