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.

You get to choose whether you use state or federal exemptions during your bankruptcy case to protect property, assets, or equity from creditors. You may not select some exemptions from the state and others from the federal government; it’s all or nothing. 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 specified dollar amounts, which are typically 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 offer greater protection to bankruptcy petitioners and are often worth more. 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

Should You Use Federal or Pennsylvania Exemptions to Protect Your House?

Bankruptcy exemptions that let you 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.

However, there is a federal homestead exemption. 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.

How Does the Federal Homestead Exemption Work?

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, or twice that amount if you are a married couple filing a joint bankruptcy claim.

If you claim this exemption, your home could 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.

What Bankruptcy Exemptions Should You Use for Your Vehicle in Pennsylvania?

You may also be 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.

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

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 in 2025. Like with your home, this may not completely shield your car from being sold, but it may help you save money on the sale.

How Do Federal and Pennsylvania Bankruptcy Exemptions Differ?

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

Personal Property Exemptions

Federal exemptions generally 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 in 2025. 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 allows you to exempt the full value of clothing, schoolbooks and Bibles, professional uniforms, and sewing machines belonging to seamstresses.

No other items of personal property are protected in Pennsylvania, making this exemption may be much 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 ensure your specific accounts are protected.

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) in 2025. 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 or Pennsylvania State Bankruptcy Exemptions Better?

Whether the state exemptions offered by Pennsylvania or the federal exemptions are better is entirely up to you. However, you should review these exemptions with our lawyers to maximize their potential and save as much money and assets 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 best option.

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.

Which exemptions to choose is ultimately your decision, but you should talk to our lawyers first to ensure you take the most advantageous option.

Can You Switch from Federal to State Exemptions During Bankruptcy?

Whether you choose to use state or federal bankruptcy exemptions initially, you may still have time to change your mind and switch if your case is still ongoing.

Can You Switch?

Pennsylvania, like some other states, allows debtors who have already filed for bankruptcy to change their minds about using federal or state Chapter 7 bankruptcy exemptions.

While you can change from using federal or state exemptions during bankruptcy, you cannot mix and match exemptions from both sets; you must choose from one set.

How Do You Switch?

Our Pennsylvania bankruptcy lawyers can help you switch from federal to Pennsylvania state exemptions, or vice versa, by completing an amended Schedule C form. This document indicates which exemptions you wish to use to protect assets.

Once we amend the Schedule C form, we must file it with the bankruptcy court, and any creditors involved in your case will be notified.

How Long Do You Have to Switch Bankruptcy Exemptions?

While you may be able to switch from federal or state exemptions any time before your case officially closes, being proactive is important. If you don’t properly protect important assets from the get-go, they may already be liquidated by the time you file an amended Schedule C form.

Should You Switch?

If the current set of bankruptcy liquidation exemptions you’re using doesn’t go far enough to protect your most important assets, such as your home or car, our lawyers can see if switching to another set during your case would be more beneficial.

FAQs About Choosing Between State and Federal Bankruptcy Exemptions

Should I Choose Federal or State Exemptions in Pennsylvania?

The set of liquidation exemptions you choose depends on which assets you want to protect the most, such as your home, vehicle, personal property, retirement accounts, and more.

Do I Need a Lawyer to Choose Between Federal or State Exemptions in Pennsylvania?

An experienced attorney can assess all your largest assets and determine whether federal or Pennsylvania state exemptions would better protect them. Without a lawyer, you might choose the wrong set, putting important assets in jeopardy.

Do I Choose Between State and Federal Exemptions for Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is a liquidation bankruptcy, so you must choose and use state or federal exemptions so that major assets are not liquidated to repay creditors.

Do I Choose Between State and Federal Exemptions for Chapter 13 Bankruptcy?

Although Chapter 13 bankruptcy does not require asset liquidation, exemptions still matter, as your non-exempt assets and income are used to set up a realistic repayment plan.

Can I Combine State and Federal Bankruptcy Exemptions?

You can’t combine state and federal bankruptcy exemptions and choose the best ones from each set. It’s either or, never both.

What if I Want to Use a Different Set of Exemptions During My Case?

Debtors who realize the set of exemptions they initially chose isn’t exhaustive enough may still have time to change their minds and switch to a different set with our attorneys’ help, whether federal or state.

What if I Don’t Choose the Right Bankruptcy Exemptions?

If you don’t choose the right bankruptcy exemptions during your case, you risk losing your home, car, and other valuable assets to creditors via liquidation.

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.