Legal Question in Bankruptcy in Pennsylvania

Re: Homestead Exemption

There is a possibility that you may be able to keep your house. There is a Homestead exemption that applies in Chapter 7 bankruptcies. But a further analysis would be needed, for example, the amount of equity in the house needs to be known, what types of bills are you intending to have discharged by the Court and what type of liability you have in regard to the business, etc etc. What County do you live in?

Re: bankruptcy with multiple properties

As you may know, there are generally two types of bankruptcies for consumers, Chapter 7 and 13. The former is generally for those who simply require the elimination of unsecured debt such as credit cards. The latter is generally for those who have fallen behind in secured debt such as a mortgage. Chapter 13 allows you to repay any arrears over five years.

A bankruptcy protects just about all consumer assets. There is a $16,000.00 homestead exemption in your principal residence. The contents of your home, if any one item is not worth a great deal, are exempt up to $8,000.00. There are many other exemptions, as well.

An exemption is a dollar amount assigned to an asset so that, if a Trustee ( the person charged with liquidating assets) were to attempt to sell such an asset, he would have to pay the exemption amount to you. Since the stated exemptions usually cover the value of the assets, most consumer cases are determined to be "no asset". Thus, you simply obtain a discharge of your debt.

Although you referred to a business, unless you are incorporated, the business is actually you. If you filed a Schedule C on your 1040, you are a sole proprietorship. Thus, there would only be a need for one bankruptcy. Even if you had a corporation, it is not necessary to do a bankruptcy for that business which is no longer operating.

I have handled many bankruptcies involving multiple properties and an analysis of the equity and net gain or loss on each property is helpful to determine the best course of action. Sometimes, you may be able to sell a property with equity and/or keep others that may yield positive cash flow. The worst case scenario is that you simply file a Chapter 7 for yourself, allow the properties to go to sheriff's sale and obtain a fresh start. That, of course, assumes that your home has little or no equity after your exemption.

You should speak with experienced bankruptcy counsel as soon as possible to discuss all the ramifications.

I trust this has been helpful, but feel free to call or e-mail with further questions.

Re: Homestead Exemption

You have to list all your assets and debts--business ones in a business bankruptcy, personal ones in a personal bankruptcy. There are exemptions for retaining personal property in a personal bankruptcy, which can allow you to keep your home if you keep up with the mortgage payments.

You should consult a bankruptcy attorney about your individual situation. If you live in Lehigh, Berks, or Lancaster counties, or the 5-county Philadelphia area, a bankruptcy would be filed in the federal bankruptcy court located in Philadelphia. This is where I practice and I would welcome the opportunity to work with you.