How to File for Personal Bankruptcy in Pennsylvania

Facing overwhelming debt can feel isolating and stressful. If you’re considering bankruptcy in Pennsylvania, understanding the process can help you make informed decisions about your financial future. This guide walks through the basics of filing for personal bankruptcy, with a focus on Chapter 7.

Understanding Chapter 7 Bankruptcy

Chapter 7 bankruptcy, often called “liquidation bankruptcy,” allows individuals to discharge most unsecured debts like credit cards, medical bills, and personal loans. In Pennsylvania, as elsewhere, a court-appointed trustee may sell certain non-exempt assets to pay creditors, though many filers keep most or all of their property through exemptions.

The process typically takes three to six months from filing to discharge, making it the fastest form of bankruptcy relief available.

Determining Eligibility

Before filing, you must pass the means test, which compares your income to Pennsylvania’s median income for your household size. If your income falls below the median, you generally qualify for Chapter 7. If it’s above, the test examines your disposable income after allowed expenses to determine eligibility.

You’ll also need to complete credit counseling from an approved agency within 180 days before filing. This requirement ensures you’ve explored alternatives to bankruptcy.

Gathering Required Documentation

Pennsylvania bankruptcy filers need extensive financial documentation, including pay stubs from the past six months, tax returns for the previous two years, a list of all assets and debts, monthly living expenses, and records of recent financial transactions. Thorough preparation of these documents helps avoid delays in your case.

Choosing Your Exemptions

Pennsylvania offers filers a choice between state exemptions and federal exemptions—you must choose one system. The federal exemptions often provide more generous protections for equity in your home, vehicle, and personal property. Pennsylvania’s state exemptions protect items like clothing, bibles, and certain tools of trade, but the homestead exemption is notably limited compared to federal options.

Working with an attorney can help you determine which exemption system best protects your assets.

Filing Your Petition

You’ll file your bankruptcy petition with the United States Bankruptcy Court for the Eastern, Middle, or Western District of Pennsylvania, depending on where you live. The petition includes detailed schedules listing your income, expenses, assets, debts, and recent financial transactions.

Upon filing, an automatic stay immediately stops most collection actions, including lawsuits, wage garnishments, and creditor calls. This provides breathing room while your case proceeds.

Attending the Meeting of Creditors

Approximately 30 to 45 days after filing, you’ll attend a meeting of creditors, also called a 341 meeting. Despite the name, creditors rarely attend. The trustee will ask questions under oath about your financial situation and petition. This typically lasts 10 to 15 minutes if your paperwork is in order.

Completing Debtor Education

Before receiving your discharge, you must complete a debtor education course from an approved provider. This course covers money management and budgeting skills to help you rebuild your financial life after bankruptcy.

Receiving Your Discharge

If no creditors object and you’ve met all requirements, the court typically issues your discharge about 60 to 90 days after the meeting of creditors. This order eliminates your legal obligation to pay discharged debts, giving you a fresh financial start.

Important Considerations

Not all debts can be discharged in Chapter 7. Student loans, most tax debts, child support, alimony, and debts incurred through fraud typically survive bankruptcy. Additionally, bankruptcy will impact your credit score for up to 10 years, though many people begin rebuilding credit within a few years.

Filing for bankruptcy is a serious decision with long-term consequences. While this guide provides an overview of the process in Pennsylvania, bankruptcy law is complex and individual circumstances vary greatly. Consulting with a qualified bankruptcy attorney can help you understand your options, protect your assets, and navigate the process successfully.

Remember, bankruptcy exists to provide relief to those facing genuine financial hardship. If you’re struggling with debt, exploring your options—including bankruptcy—is a responsible step toward regaining financial stability.