What assets can be taken by law in Pa

by Neal
(Womelsdorf, Pa, USA)

My wife has large debts, but no assets other than our house. I have 2 pensions and a small IRA. Are any of these assets available to debt collectors? We live in Pa.

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Mar 03, 2010
 Bankruptcy Exemptions in PA
by: Mary

Neal:

So sorry to learn that you are having debt problems. In bankruptcy, property that you can keep is referred to as exempt property and property that you are at risk for losing is nonexempt property. Every state has its own list of exempt and nonexempt property and the federal government has its own list. Your state allows consumers who file for bankruptcy to decide whether they will claim their state's exemptions or the federal exemptions. You have to choose one set of exemptions or the other -- you cannot mix and match. Which list to use is strategically important because the decision can make a big difference in terms of the assets you get to keep in bankruptcy. Therefore, it's a decision you should make with the help of an experienced bankruptcy attorney. I strongly suggest you set up a free consultation with a bankruptcy attorney.

Unlike many other states, Pennsylvania does not have a homestead exemption (your homestead is your primary residence.). Therefore, you are at risk for losing it in bankruptcy. However, the exemption law of your state does state that if you hold your home as tenancy by entirety (a specific type of ownership) it may be exempt against debts owned by just you or by just your spouse. A bankruptcy attorney can help you determine how you own your home if you are unsure and whether or not you would qualify for this particular exemption. Even if you don't qualify however you have other options in bankruptcy for holding on to your home. Again a bankruptcy attorney will explain them and help you determine if any of those options are viable for you given the state of your finances.

I've got better news for you when it comes to your pensions and IRA. The federal bankruptcy law says that virtually all tax-exempt pensions and retirement savings accounts, like your IRA, are exempt from bankruptcy. This is the case whether you decide to claim Pennsylvania's exemptions or the federal exemptions.

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