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Pennsylvania Bankruptcy

Pennsylvania Bankruptcy


Pennsylvania Bankruptcy Law


The state of Pennsylvania bankruptcy law closely reflects the federal law.  However, Pennsylvania mandates some of the more strict policies around entitled exemptions than other states.  PA Bankruptcy is no easy process, and an individual or family may even suffer for awhile during bankruptcy.  Yet, the laws are not in place to stop people from filing Pennsylvania bankruptcy, and the process of PA bankruptcy can often save someone’s credit in the long run. 


Like most states, Pennsylvania requires a person to attend a credit counseling course six months before they register for Pennsylvania bankruptcy.  Additionally, a person must also attend a debtor education course before a final settlement is agreed upon.  


Pennsylvania Bankruptcy : Personal and Corporation


Both individuals and corporations can file for Pennsylvania bankruptcy.  Depending on a family’s circumstances and means for income, they may choose or be forced to file for Chapter 7 or Chapter 13.  If a corporation needs time to reorganize their finances in the wake up economic trouble, it may consider filing for Chapter 11.  


PA Bankruptcy : Chapter 7


Filing for Chapter 7 within the state of Pennsylvania is generally harder compared to other states.  This type of PA bankruptcy is often referred to as straight or liquidation, and the person or must have a significant amount of unsecured debt and lack of means for income.  


Before getting approved to file Chapter 7, a person or family must pass a means test.  The test establishes that the family’s income falls below the state average.  The unemployment rate is quite high in Pennsylvania at 8.7%, and the average household income is $49,245.  If the family qualifies for Chapter 7, their exemptions are also limited:


• $300 for property

• All personal earnings

• Clothing

• Veteran benefits


PA Bankruptcy : Chapter 11


If a corporation is facing economic hardship, it may opt to file for Chapter 11.  This type of Pennsylvania bankruptcy allows the company to reorganize its finances, employees, and logistics in order to reduce debt.  The owner of the company often oversees the reorganization, and the only asset that may be in trouble is the value of the corporation’s stock.  


PA Bankruptcy : Chapter 13


If a judge and creditor deduce that a family can make structured payments over the next three to five years in order to pay up to 25% of the net debt, a family will file Chapter 13 bankruptcy.  This type of bankruptcy is also beneficial to families with a lot of property.  The property is usually protected from foreclosure during a Chapter 13.  




A creditor may collect state and federal tax returns in a Chapter 7, but the assets usually come back to you in a Chapter 13.  Additionally, backed taxes owed to the IRS or other collection company will not be waived.  


Filing for Pennsylvania Bankruptcy


It’s always a good idea to hire an attorney when thinking about filing for Pennsylvania bankruptcy.  You can always go through a state filing service, but a lawyer will provide you with necessary help.  They can help you file the right documents and fees at the right time, and they can help you reach the best possible settlement with the creditors.