New Pennsylvania Bankruptcy Laws
The 2005 Bankruptcy Act set new guidelines for how bankruptcy is to be
handled nationwide. More paperwork is included along with additional
rules. These include stricter capping on eligibility for Chapter Seven
bankruptcy and increased monthly payments in Chapter Thirteen
The government also set new bankruptcy abuse guidelines. These
guidelines were made to reduce the amount of individuals who abuse the
bankruptcy system. Bankruptcy abuse can include filing for bankruptcy
due to purposeful and poor management of finances and debts. To help
this problem, at least six months before bankruptcy is petitioned
individuals who want to file for bankruptcy are required to attend an
instructional course on managing finances.
A means test also eliminates bankruptcy abusers by comparing an
individual's average income to the median of the state of Pennsylvania.
According to state law those who are married have the option of filing
for bankruptcy together as a couple or an individual may file for
bankruptcy as a single adult.
The Kinds of Bankruptcy
Pennsylvania offers two kinds of bankruptcy. Chapter Thirteen
bankruptcy gives individuals a court assigned repayment plan according
to income and expenses. This payment plan lasts a maximum of five years
and requires that certain amounts of debts be paid each month.
All debts are to be paid with an individual's own personal income.
Chapter Seven bankruptcy assigns a trustee to liquidate un-exempt
property and to use the obtained funds to pay off creditors. This
process can last up to six months or as low as three months.
Chapter Seven bankruptcy has several categories for property exemptions
in Pennsylvania. Despite these categories, individuals are allowed to
choose between federal property exemptions or Pennsylvania property
exemptions. Federal exemption statues can be used in addition to
Pennsylvania exemptions, if an individual so wishes.
Property that is noted as non-exempt may only be kept if the individual
chooses to purchase the property as is to be liquidated. Equity also
qualifies for exemptions, but only if the loan is secure, the payments
are up to date and current, and if the property is a home or a motor
vehicle. This is only true if the equity is covered. If the equity is
not covered under exemptions, the assigned trustee has the option of
liquidating the asset and distributing the assets accordingly.
Individuals are usually entitled to the exemptions asset value for
payment into cash, in these cases.
The categories for Pennsylvania exemptions include the value amounts
for the properties. Exemptions in this state include insurance,
miscellaneous, pensions, personal property, tools of trade, wages, wild
card, and public benefits. Unlike most states, Pennsylvania does not
have an exemption for homestead, unless only one spouse owns the debts.
Insurance exemptions can include disability benefits, life insurance,
and fraternal benefit society benefits. Personal property exemptions
include uniforms, schoolbooks, clothing, and sewing machines. Pensions
can include city employees, municipal employees, police officers, state
employees, and private retirement benefits. Other exemptions include
unpaid wages, three hundred dollars of any kind of property, workers'
compensation, and Korean conflict veterans' benefits.