Turner & O’Connell, Attorneys At Law

Serving Pennsylvania since 1984


Our lawyers solve difficult legal problems concerning bankruptcy, divorce, obtaining disability benefits, real estate and estate planning.

Will I lose my home if I file Chapter 7 bankruptcy?

| Jan 4, 2018 | Blog |

If you are faced with a situation where you are considering filing Chapter 7 bankruptcy, you should know there is no shame in doing so. Filing bankruptcy is an option many people use to give themselves a fresh start after an unexpected crisis throws their finances into chaos. It can happen to anyone.

It is also worth knowing what Chapter 7 bankruptcy entails, and what your options are for keeping your assets. There is often a fear that people who file bankruptcy will lose their home. Is this inevitable with Chapter 7 bankruptcy?

Chapter 7 exemptions

In Pennsylvania, those filing Chapter 7 bankruptcy can exempt assets, which are not lost in the process, up to a certain limit. The limit applies to the equity you have in the property. Equity is calculated by finding the difference between the value of the property and what you owe on it. For instance, if you have a car valued at $3,000 and you owe $2,000 on the loan, the equity you can exempt is $1,000.

There are no homestead exemptions in Pennsylvania; however, property held as tenancy by the entirety may be exempt against debts owed by only one spouse. To keep non-exempt property, the debtor generally must pay the trustee the value of the non-exempt property.

Pennsylvania residents are able to take exemptions on other forms of property and to use federal exemptions in conjunction with their state exemptions. These federal exemptions can include retirement benefits, survivor’s benefits and death & disability benefits.

Chapter 13 bankruptcy also an option

Keeping property in a Chapter 7 filing can be complicated, but it is definitely possible. If a Chapter 7 filing looks like it may not allow you to keep property, there is also the option of filing Chapter 13 bankruptcy. In this filing, you reorganize your debt and create a payment plan that you are able to manage over a three- to five-year period.

Talking to a bankruptcy attorney can help you identify your options for filing Chapter 7 bankruptcy and how to keep your assets, or they can walk you through a Chapter 13 filing instead. Bankruptcy does not inevitably lead to losing your home, and these professionals can help navigate the process with the goal of keeping your assets in mind.