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 bankruptcy cases.
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.