In bankruptcy, a homestead exemption protects equity in your home. Here you’ll find specific information about the homestead exemption in Pennsylvania.
For information about how the homestead exemption works in both Chapter 7 and Chapter 13 bankruptcy, see The Homestead Exemption in Bankruptcy. For more articles on exemptions, see our Bankruptcy Exemptions area.
The Pennsylvania exemption system does not provide a homestead exemption; however, equity in your home may be protected if you and your spouse own it as a tenancy by the entirety or if you opt to use the federal bankruptcy exemption scheme (see below).
In Pennsylvania, you can use either the state exemption system or the federal bankruptcy exemption system (but you can’t pick and choose different exemptions from each system – you have to use all state exemptions or all federal exemptions.)
The federal bankruptcy homestead exemption amount changes every three years. To find the current amount, see our article The Federal Bankruptcy Exemptions. The exemption may be used for homes, condos, co-ops, mobile homes, and burial plots. Married couples may double this exemption. You can find the federal bankruptcy homestead exemption at 11 U.S.C. §522(d)(1) and (5).
If you opt to use the federal exemption scheme, you and your spouse may double the exemption amount. Therefore, you may protect up to $43,250 of equity in your home.
Since Pennsylvania does not have its own homestead exemption statute, you are not required to file a homestead declaration. If you opt to use the federal exemptions, the homestead exemption is automatic – you don’t have to file a homestead declaration in order to claim the homestead exemption in bankruptcy.
If property is held as a tenancy in the entirety, it means the property is jointly owned by a married couple as a single marital entity, not as individuals. Pennsylvania permits tenancies by the entirety, and this may allow debtors to file bankruptcy and protect more than the homestead exemption amount.
If property is held as a tenancy in the entirety, it is owned as a whole by both married persons and creditors cannot take it to pay the debts of only one owner.For this reason, tenancy by the entirety is often referred to as a “super exemption,” although it is not actually an exemption.
There are limits to the protection provided by a tenancy in the entirety, however. If the bankruptcy filer has tax debts, or if both spouses are liable for a debt (for example, joint credit card debt or medical debt incurred during the course of the marriage), a tenancy by the entirety will not provide protection in excess of the federal homestead exemption.
While Pennsylvania does not provide a statutory homestead exemption, it does provide a wildcard exemption in the amount of $300, which may be used to protect any property, including real estate (2 Pa.C.S. § 8123). The federal wildcard exemption is more generous, as it allows you to protect up to $1,150 of value in any property, plus up to $10,825 of any unused homestead exemption value (11 U.S.C. 522(d)(5)).
The federal exemption amounts are adjusted on the first day of April of every third calendar year.They were last adjusted in April of 2010.