How to File Bankruptcy in PA and Keep Your House + Car
Most people facing financial distress are afraid there will be a day when creditors repossess their car, or when the bank takes their home. If you are concerned about this, the reality is that it can happen if there are legal judgments against your property related to collection actions. However, your house and car can be protected after filing a bankruptcy petition.
The most common misconception about bankruptcy law is that it gives creditors the right to take your assets. On the contrary, the U.S. Bankruptcy Code is designed to protect the rights of debtors while allowing significant portions of debt to be eliminated or discharged. Moreover, Pennsylvania bankruptcy laws offer options that a skilled bankruptcy attorney can apply in order to protect assets such as your home and car.
If you or someone you know is contemplating filing for bankruptcy and seeks to keep their home and car, you should contact the team of experienced bankruptcy attorneys of Young Marr and Associates. Call us at (215) 607-7478 to schedule a free and confidential consultation.
File Bankruptcy and Protect Your Car and Home in Pennsylvania
The U.S. Bankruptcy Code provides what is known as “exemptions” that make it possible for skilled bankruptcy attorneys to exclude or shield specific properties from the sales needed to pay creditors. An experienced bankruptcy lawyer typically learns more about your debt to run an exemptions analysis that will give a realistic picture of whether bankruptcy protection can help you protect your home and car.
The analysis of these exemptions will depend on the value of your property, as well as on the “equity” in your property. The term “equity” refers to the difference between the fair market value and the amount owed. Your attorney can explain the meaning and legal importance of equity at greater length.
People who seek bankruptcy protection in Pennsylvania are typically allowed to choose between state and federal bankruptcy exemptions. Here the focus will be on federal exemptions since the amounts can be more favorable for debtors as of April 1, 2019, than their state counterparts. However, the determination as to what is the most appropriate exemption choice is usually made with your attorney.
Differences Between Chapter 7 and Chapter 13
There are differences in the exemption protections for your home and car depending on the type of bankruptcy you file. Bankruptcy protection under Chapter 7 typically involves a short process where exempt property can be maintained while non-exempt property is sold. The proceeds of sales are distributed amongst the creditors. Chapter 13 filings last longer than Chapter 7 because a payment plan is designed for the payment of debts.
Sometimes you have a better chance of protecting your home and car if you file for bankruptcy under Chapter 13 than Chapter 7 of the U.S. Bankruptcy Code. However, this requires a proper legal review of your assets and legal consultation tailored to your specific situation is necessary to make this determination. The basis for this view is that when you file bankruptcy is that Chapter 7 doesn’t provide a way for you to catch up with overdue mortgage payments and the property may end up in foreclosure.
In Chapter 7 bankruptcies, if there is enough equity in your property, then the home can be sold to pay creditors. However, if you are current on your mortgage and car payments, a Chapter 7 bankruptcy filing doesn’t have to result in losing your home or car. Since every bankruptcy is different, your attorney can provide you with more information specific to your circumstances.
Federal Car Exemptions
You are typically allowed to raise car exemptions if you file for bankruptcy. To accomplish a fresh start after having portions of their debt discharged, you will need a car and a home. While every case is different, the following legal exemptions are built into the U.S. Bankruptcy Code:
The Motor Vehicle Exemption
As of April 1, 2019, Section 522(d)(2) of the US Bankruptcy Code gives debtors an interest of $4,000 to “take” as an exemption in one of your cars. This value is subtracted from the official blue book value of your vehicle. While the amount remaining based on that calculation will be owed to the creditor, your attorney can seek further protections on your behalf, depending on the type of bankruptcy protection you seek.
Federal “Wild Card” Exemption
In addition to the motor vehicle exemption, Pennsylvania residents can apply what is known as a “wild card” exemption of $1,325 to protect their car. Between the motor vehicle exemption and the wild card exemption, you have a total of $5,325 amount that can cut your total debt significantly. There are other exemptions available depending on your circumstances.
Exemptions to Protect your Home in Pennsylvania
Section 522(d)(1) of the U.S. Bankruptcy Code provides what is known as the Federal Homestead Exemption, which can be used to protect your home in Pennsylvania. Debtors who file for bankruptcy are typically allowed to exempt $25,150. If you are married and filing jointly, the exemption is doubled to $50,300.
The homestead exemption doesn’t apply to rentals; it can only apply to your principal residence, even if you are not currently occupying the property on the date of the bankruptcy petition. It does, however, include mobile homes and houseboats.
PA Bankruptcy Attorneys You Can Rely on To Seek Home and Car Protection
The experienced team of attorneys at Young, Marr, and Associates has filed thousands of bankruptcy petitions and understands the intricacies of car and homestead exemptions. If you are a Pennsylvania resident who is worried about losing your home or car, you should talk to an attorney to learn more about how bankruptcy can help you protect your rights. Depending on your assets, income, and types of debt, an experienced attorney may be able to help. To schedule a free and confidential consultation, call us at (215) 607-7478.
☑ Been paying credit card balances that seem to never go down?
☑ Lost your job and are now having trouble keeping up?
☑ Attempted to work out a payment arrangement to no avail?
☑ Been notified of a mortgage foreclosure action?
☑ Been denied for a mortgage or other line of credit?
If the answer to any of these questions is “yes” then bankruptcy may be an option that you should consider.