The Pennsylvania Homestead Exemption

If you're considering filing for bankruptcy, the homestead exemption will help you protect the equity in your house. This article explains how much the Pennsylvania homestead exemption is and how to apply it.

How Much Is Pennsylvania's Homestead Exemption?

Pennsylvania lets filers use either the federal exemption system or Pennsylvania's state exemption system, which is good news because Pennsylvania doesn't offer a state homestead exemption. However, you can't mix exemptions from both lists, so you'll want to select the system that will protect your most important assets.

We've listed the federal exemption amount below to help you make an informed choice. We've also included links to extensive federal and state exemption lists to help you decide which set will work best.

Protecting Property With the Federal Homestead Exemption in Pennsylvania

Pennsylvania has no homestead exemption, but you can protect a modest amount of home equity using the federal bankruptcy exemption scheme. Also, you might be able to protect your home equity if you and your spouse own it as a tenancy by the entirety. However, this approach can be tricky because only one spouse can file for bankruptcy, and home equity isn't protected in all cases, so be sure to speak with a lawyer first.

Other Requirements for Keeping a Home in Bankruptcy

If you can't protect all of your home equity, you might not be able to keep your home. Typically, the Chapter 7 trustee appointed to your case would sell the house, return the exemption amount to you, pay off the mortgage, and pay creditors with the amount remaining after deducting the trustee's fee.

In Chapter 13, the trustee doesn't sell property, so you could keep it. However, that doesn't mean Chapter 13 filers get a break regarding how much equity they can retain. Instead, you'd need to pay creditors the value of the nonexempt equity through the Chapter 13 plan.

But that isn't all. Keeping your home requires being current on the mortgage when filing for Chapter 7. Otherwise, you could lose it to the lender through foreclosure, possibly even during the Chapter 7 case. If you're behind on payments when filing for Chapter 13, you have an option not available in Chapter 7. You can catch up on the payments over time through the plan.

Learn about other requirements you must meet in Your Home in Chapter 7 and Your Home in Chapter 13. Also, find out why filing for Chapter 13 is better than Chapter 7 when you're behind on payments and don't want to lose your house.

Claiming the Homestead Exemption

When completing your bankruptcy forms, you'll do the following:

• disclose your home on Schedule A/B: Property
• list your home and the homestead exemption law on Schedule C: The Property You Claim as Exempt, and
• if filing for Chapter 7, explain whether you plan to keep or surrender the home on Statement of Intention for Individuals Filing Under Chapter 7.

Because your home is likely your most valuable asset, consider consulting with a bankruptcy lawyer to ensure you can protect it in bankruptcy.

Where to Find the Homestead Exemption Statute

To ensure you exempt all property possible, independently verify exemptions on the Pennsylvania General Assembly website or consult a bankruptcy lawyer. The state updates amounts periodically but not on a particular schedule, and this article isn't updated in real time.

When You Can Use Bankruptcy Exemptions

You can file for bankruptcy in Pennsylvania after living there for over 180 days. However, you must live in Pennsylvania for at least 730 days before filing

to use the current state's exemptions. Otherwise, you'd use the previous state's exemptions.

If you lived in multiple states during the two years before filing for bankruptcy, you'd use the exemptions of the state you lived in for the majority of the 180 days before the two years immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).)

Learn more about filing for bankruptcy after moving to a new state, the current amount of the federal cap, and other essential exceptions to homestead exemptions. Also, spouses can double some exemption amounts if both parties own the property, but not all of them. Learn about other filing considerations for spouses.

Need More Bankruptcy Help?

Did you know Nolo has made the law accessible for over fifty years? It's true, and we wholeheartedly encourage research and learning. You can find many more helpful bankruptcy articles on Nolo's bankruptcy homepage. Information needed to complete the official downloadable bankruptcy forms is on the Department of Justice U.S. Trustee Program website.

However, online articles and resources can't address all bankruptcy issues and aren't written with the facts of your particular case in mind. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.