Can You Choose Between State & Federal Exemptions in Pennsylvania Bankruptcy?

If you file for bankruptcy, certain legal exemptions exist that may help you protect assets and property up to a specific dollar amount. These exemptions may be offered by Pennsylvania or the federal government. While you might find several helpful exemptions, you must choose between state and federal offerings.

Bankruptcy exemptions may allow you to protect property, assets, or equity from creditors, but you must choose between federal and state exemptions. You may not select some exemptions from the state and others from the federal government; it’s all or nothing. You must speak to your bankruptcy attorney about your finances and which exemptions might help you more. While the state offers some exemptions for personal property and other things, the federal government offers a homestead exemption for your house. Generally, Pennsylvania exemptions are weaker than the federal ones. Again, your attorney can help you decide which path is right for you.

Call Young, Marr, Mallis & Associates at (215) 701-6519 and ask our Pennsylvania bankruptcy lawyers for a free case review.

Choosing Between Federal and State Bankruptcy Exemptions in Pennsylvania

When filing for bankruptcy, you may claim certain exemptions, allowing you to retain property or assets that the government might otherwise seize. Different states may have different exemptions, and federal laws also provide for exemptions. In Pennsylvania, you may choose to claim either Pennsylvania’s exemptions or federal exemptions, but you cannot choose both.

Pennsylvania Exemptions

Pennsylvania offers the following exemptions up to certain dollar amounts that may be adjusted annually. Note that Pennsylvania does not offer exemptions for your home or vehicle,

• Personal property
• Wildcard exemption (may be applied to personal property not otherwise exempt)
• Wage exemptions
• Retirement accounts
• Money from public assistance, unemployment, or Workers’ Compensation
• Insurance proceeds and annuity payments

Federal Exemptions

Federal exemptions tend to offer more protection to bankruptcy petitioners and are often worth more money. Even so, talk to your attorney before deciding which exemptions to choose.

• Homestead exemptions
• Vehicle exemptions
• Household goods
• Jewelry
• Wildcard exemption
• Tools of the trade (may allow you to retain tools you need for work)
• Insurance proceeds
• Personal injury proceeds
• Retirement accounts
• Wages
• Social Security benefits
• Veterans’ benefits

Federal or Pennsylvania Exemptions for Your House

Bankruptcy exemptions that allow you to protect equity in your home are often referred to as “homestead” exemptions. Unfortunately, Pennsylvania does not offer homestead exemptions. However, there are federal homestead exemptions that you may claim.

Remember, if you choose to claim the federal homestead exemption, you may only claim other federal exemptions. You cannot claim any state exemptions once you claim the federal homestead exemption.

According to 11 U.S.C. § 522(d)(1), the federal homestead exemption may allow homeowners to exempt a certain amount of equity in their home from the bankruptcy process. As of 2025, you may exempt up to $31,575 of your home’s equity.

If you claim this exemption, your home may still be sold off through the bankruptcy liquidation process if you file under Chapter 7. However, at least $31,75 from the sale must be returned to you. You may use this money to help you start over once the bankruptcy process is complete.

Bankruptcy Exemptions for your Vehicle in Pennsylvania

You might also be very interested in protecting your vehicle. Many of us rely on our vehicles to get to work and cannot earn a living without them. Again, Pennsylvania does not offer an exemption for vehicles; however, a federal exemption is available that you may claim.

According to 11 U.S.C. § 522(d)(2), you may exempt up to $5,025 of the equity in your vehicle from the bankruptcy process. Like with your home, this may not completely shield your car from being sold, but it may help you save money on the sale.

Again, if you want to claim an exemption for your car or other vehicle, you have to choose the federal exemptions.

How Federal and Pennsylvania Bankruptcy Exemptions Differ

There are numerous other exemptions offered at the state and federal levels. You should discuss these exemptions with a lawyer to determine which ones you should claim.

Personal Property Exemptions

Federal exemptions tend to offer protection for a greater variety of items and personal possessions. The federal exemption for household goods allows you to exempt individual items up to $800 in value and an aggregate limit of $16,850. Jewelry may be exempt up to $2,125. Tools of the trade (i.e., work equipment) may be exempt up to $3,175.

The exemption offered by Pennsylvania, under 42 Pa.C.S. § 8124(a), allows you to exempt the full value of clothing, school books and Bibles, professional uniforms, and sewing machines belonging to seamstresses. No other items of personal property are mentioned within the statute, so this exemption may be quite more limited than the federal exemption. There are no Pennsylvania exemptions specifically for tools of the trade or jewelry.

Retirement Accounts

You may also have exemption options for retirement accounts. Under Pennsylvania law, you may exempt certain retirement or pension funds. You should talk to your attorney about these exemptions to make sure your specific accounts are exempt.

Federal exemptions also exist for retirement accounts. Many employer-sponsored requirement plans are fully exempt, while individual retirement accounts (IRAs) may be exempt up to a certain limit.

Wildcard Exemptions

Another kind of exemption exists called a wildcard exemption. This allows you to exempt any personal assets from the bankruptcy process up to a certain dollar amount, including cash, accounts, and anything not covered or over the limit in other categories of exemption.

Under federal law, you may exempt up to $1,675 of any personal asset up to an aggregate of $15,800 of any unused portion of the homestead exemption (e.g., if you rent and have no house to put the exemption toward). That is a total of $17,475 available to you under the federal wildcard exemption.

Pennsylvania also has a wildcard exemption that allows you to exempt up to $300 as a general monetary exemption.

Are Federal Pennsylvania State Bankruptcy Exemptions Better?

Whether the state exemptions offered by Pennsylvania or the federal exemptions are better is entirely up to you. However, it is wise to review these exemptions with a lawyer so you can hopefully maximize their potential and save as much money as possible from bankruptcy.

Generally, federal exemptions offer a greater degree of protection and may help you exempt more property and assets of higher value than state exemptions. Even so, if you do not own a home or a vehicle, you may not need to claim many federal exemptions, and state options might be a better choice. However, if you are a homeowner or rely on a vehicle, federal exemptions might be the way to go.

Factors to Consider When Selecting Bankruptcy Exemptions

When deciding what exemption to claim, you should consider multiple important factors regarding your finances and assets. Do you own property? If you own a home, condo, or other real property, federal exemptions may help you keep some of the equity in these assets. Similarly, if you own a vehicle, federal exemptions may be more helpful.

It is ultimately up to you what exemptions to choose, but you should talk to a lawyer first to make sure you are taking the most advantageous option.

Contact Our Pennsylvania Bankruptcy Lawyers for Help with Your Case

Call Young, Marr, Mallis & Associates at (215) 701-6519 and ask our Philadelphia bankruptcy lawyers for a free case review.