The Complete Guide to Filing Bankruptcy in Pennsylvania

Written by Michael Alan Siddons, Esquire | Martindale-Hubbell AV Preeminent Rated | AVVO 10.0 “Superb” | Updated March 2026

Table of Contents

• What Is Bankruptcy?
• Types of Bankruptcy Available in Pennsylvania
• Chapter 7 Bankruptcy: Liquidation
• Chapter 13 Bankruptcy: Repayment Plan
• Chapter 11 & Chapter 12 Bankruptcy
• The Means Test: Do You Qualify?
• Pennsylvania Bankruptcy Exemptions
• Step-by-Step Filing Process
• How Much Does Bankruptcy Cost in PA?
• The Automatic Stay: Immediate Protection
• How Bankruptcy Affects Your Credit
• Common Bankruptcy Myths
• Frequently Asked Questions
• Contact a Pennsylvania Bankruptcy Attorney

What Is Bankruptcy?

Bankruptcy is a legal process established under federal law (Title 11 of the United States Code) that allows individuals and businesses overwhelmed by debt to either eliminate their debts entirely or restructure them into a manageable repayment plan. Filing bankruptcy triggers an “automatic stay” under 11 U.S.C. Section 362, which immediately stops most collection actions, lawsuits, wage garnishments, and foreclosure proceedings.

In Pennsylvania, bankruptcy cases are filed in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania (covering Philadelphia, Delaware County, Chester County, Montgomery County, and Bucks County) or the Western or Middle Districts depending on where you live. Siddons Law Firm primarily serves clients filing in the Eastern District.

Types of Bankruptcy Available in Pennsylvania

There are four types of bankruptcy available to Pennsylvania residents, each designed for different financial situations:

Chapter	Best For	Duration	Key Feature
Chapter 7	Low-income individuals with mostly unsecured debt	3-4 months	Eliminates most unsecured debts entirely
Chapter 13	Those with regular income who want to keep assets	3-5 years	Restructures debt into affordable payments
Chapter 11	Businesses and high-debt individuals	Varies	Business reorganization while operating
Chapter 12	Family farmers and fishermen	3-5 years	Specialized protection for agricultural operations

Chapter 7 Bankruptcy: Liquidation

Chapter 7 is the most common type of bankruptcy filed in Pennsylvania. Often called “liquidation bankruptcy,” Chapter 7 eliminates most unsecured debts including credit card balances, medical bills, personal loans, utility arrears, and certain older tax debts. The entire process typically takes just 3 to 4 months from filing to discharge.

Who Qualifies for Chapter 7?

To qualify for Chapter 7 in Pennsylvania, you must pass the “Means Test” under 11 U.S.C. Section 707(b). The test compares your household income to the Pennsylvania median income for your family size. As of 2026, the approximate Pennsylvania median incomes are:

Household Size	Annual Median Income
1 person	~$62,000
2 people	~$79,000
3 people	~$93,000
4 people	~$112,000

If your income is below the median, you automatically qualify. If it is above, a more detailed analysis of your disposable income determines eligibility. Even above-median earners may qualify if their expenses leave insufficient disposable income to fund a Chapter 13 plan.

What Debts Does Chapter 7 Eliminate?

Chapter 7 discharges most unsecured debts, including credit card debt, medical bills, personal loans, payday loans, utility bills, and some older income tax debts. However, certain debts cannot be discharged under 11 U.S.C. Section 523, including child support, alimony, most student loans, recent tax debts (within 3 years), debts from fraud, and DUI-related judgments.

Chapter 13 Bankruptcy: Repayment Plan

Chapter 13 bankruptcy allows individuals with regular income to restructure their debts into a 3-to-5-year repayment plan. This is often the best option for homeowners facing foreclosure, because it allows you to catch up on mortgage arrears over time while keeping your home. At the end of the plan, remaining qualifying unsecured debts are discharged.

Key Benefits of Chapter 13

Chapter 13 offers several advantages over Chapter 7: you can stop foreclosure and cure mortgage arrears over 3-5 years, you can keep non-exempt property that might be liquidated in Chapter 7, you can “cram down” certain secured debts to the collateral value, and co-debtors on consumer debts are protected from collection. Additionally, Chapter 13 stays on your credit report for 7 years rather than the 10 years for Chapter 7.

Chapter 11 and Chapter 12 Bankruptcy

Chapter 11 bankruptcy is primarily used by businesses that need to reorganize while continuing operations. However, individuals with debts exceeding Chapter 13 limits may also file under Chapter 11. The process is more complex and expensive than Chapter 13 but offers greater flexibility in restructuring.

Chapter 12 is a specialized form of bankruptcy available exclusively to “family farmers” and “family fishermen” with regular annual income. It is similar to Chapter 13 but with provisions specifically tailored to the seasonal nature of farming and fishing income. Pennsylvania’s agricultural communities in Lancaster, Chester, and Berks Counties may benefit from Chapter 12 protection.

The Means Test: Do You Qualify for Chapter 7?

The Means Test, established by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), is a two-part analysis. First, your current monthly income (averaged over the 6 months before filing) is compared to the Pennsylvania median for your household size. If your income is below the median, you pass automatically. If above, the second part deducts allowed expenses from your income to determine disposable income. If your disposable income is low enough, you still qualify for Chapter 7.

Important: The Means Test uses specific IRS expense standards and actual secured debt payments. An experienced bankruptcy attorney can identify all allowable deductions to maximize your chances of qualifying. Call (610) 255-7500 for a free Means Test analysis.

Pennsylvania Bankruptcy Exemptions

Bankruptcy exemptions determine what property you can keep when filing. Pennsylvania is one of the states that allows filers to choose between state exemptions and federal exemptions. In most cases, the federal exemptions provide better protection for Pennsylvania residents.

Asset	Federal Exemption (2026)	PA State Exemption
Homestead (equity in home)	~$27,900 (individual) / ~$55,800 (married)	No state homestead exemption
Motor vehicle	~$4,450	No specific vehicle exemption
Personal property (wildcard)	~$1,475 + up to ~$13,950 unused homestead	$300 per item (42 Pa. C.S. Section 8124)
Retirement accounts (401k, IRA)	Fully exempt	Fully exempt (42 Pa. C.S. Section 8124(b)(3))
Social Security benefits	Fully exempt	Fully exempt

Most Pennsylvania filers choose federal exemptions because of the homestead exemption and generous wildcard provision. Your attorney will analyze your assets to determine which exemption set provides maximum protection.

Step-by-Step: How to File Bankruptcy in Pennsylvania

Step 1: Free Consultation with a Bankruptcy Attorney. Meet with an experienced bankruptcy attorney to review your financial situation, determine which chapter is right for you, and discuss the process. At Siddons Law, consultations are free and confidential.

Step 2: Complete Credit Counseling. Federal law requires you to complete a credit counseling course from an approved agency within 180 days before filing. This course takes about 60-90 minutes and can be done online. Cost is typically $25-50.

Step 3: Gather Financial Documents. You will need: tax returns (2 years), pay stubs (6 months), bank statements (6 months), mortgage statements, vehicle loan documents, credit card statements, medical bills, and a list of all assets and debts.

Step 4: Prepare and File the Bankruptcy Petition. Your attorney prepares the petition, schedules, and statements required by the court. These include Schedule A/B (property), Schedule C (exemptions), Schedule D (secured debts), Schedule E/F (unsecured debts), Schedule I (income), and Schedule J (expenses). The petition is filed electronically with the U.S. Bankruptcy Court.

Step 5: Automatic Stay Takes Effect. The moment your petition is filed, the automatic stay under 11 U.S.C. Section 362 takes effect. Creditors must immediately stop all collection calls, lawsuits, wage garnishments, and foreclosure proceedings.

Step 6: Attend the 341 Meeting of Creditors. Approximately 30-45 days after filing, you attend a brief meeting (usually 5-15 minutes) where the bankruptcy trustee asks questions about your petition under oath. Your attorney will be present. Creditors may attend but rarely do.

Step 7: Complete Debtor Education Course. After the 341 Meeting, you must complete a debtor education (financial management) course from an approved provider. This is a separate course from the pre-filing credit counseling.

Step 8: Receive Your Discharge. For Chapter 7, your discharge typically arrives 60-90 days after the 341 Meeting. For Chapter 13, the discharge comes after completing all plan payments (3-5 years). The discharge order eliminates your legal obligation to pay the discharged debts.

How Much Does Bankruptcy Cost in Pennsylvania?

The cost of filing bankruptcy in Pennsylvania includes the court filing fee ($338 for Chapter 7, $313 for Chapter 13), credit counseling and debtor education courses ($50-100 total), and attorney fees (which vary). Fee waivers are available for Chapter 7 filers whose income is below 150% of the federal poverty guidelines.

At Siddons Law Firm, we work with clients to make bankruptcy affordable. Many Chapter 7 cases can be filed with minimal upfront costs, and Chapter 13 attorney fees are typically paid through the repayment plan.

The Automatic Stay: Immediate Protection

One of the most powerful protections in bankruptcy is the automatic stay. Under 11 U.S.C. Section 362, filing your petition immediately stops creditor harassment calls, pending and threatened lawsuits, wage garnishments and bank levies, foreclosure proceedings, vehicle repossession, utility disconnections, and eviction proceedings (temporarily). Any creditor that violates the automatic stay may be held in contempt of court and ordered to pay damages.

How Bankruptcy Affects Your Credit

A Chapter 7 bankruptcy remains on your credit report for 10 years from the filing date; Chapter 13 remains for 7 years. However, most clients find that their credit scores begin improving within 12-18 months after discharge. Many clients are able to obtain secured credit cards immediately after discharge, auto loans within 1-2 years, and mortgage loans within 2-4 years. The fresh start bankruptcy provides often leads to better credit outcomes than struggling with unmanageable debt for years.

Common Bankruptcy Myths in Pennsylvania

Myth: You will lose everything. Reality: Most Chapter 7 filers keep all their property thanks to bankruptcy exemptions. Pennsylvania filers who choose federal exemptions can protect their home equity, vehicle, retirement accounts, and personal property.

Myth: Everyone will know you filed. Reality: While bankruptcy filings are public record, they are not published in newspapers. The only people who typically know are your creditors, who are notified by the court.

Myth: You can never get credit again. Reality: Most clients receive credit card offers within weeks of discharge and can qualify for auto loans and mortgages within 1-4 years.

Myth: Married couples must file together. Reality: Either spouse can file individually. Whether to file jointly or individually depends on whose name the debts are in, property ownership, and income considerations.

Frequently Asked Questions

Can I file bankruptcy without a lawyer? While legally permitted, filing pro se (without an attorney) is strongly discouraged. Bankruptcy law is complex, and mistakes can result in case dismissal, loss of property, or failure to discharge debts. An experienced attorney ensures your rights are protected.

Will I lose my house if I file Chapter 7? Not necessarily. If your home equity is within the exemption limits (approximately $27,900 for an individual under federal exemptions) and you are current on mortgage payments, you can keep your home.

How often can I file bankruptcy? You can receive a Chapter 7 discharge once every 8 years. Chapter 13 can be filed every 2 years. A Chapter 13 can be filed 4 years after a Chapter 7 discharge.

Can bankruptcy stop a foreclosure? Yes. The automatic stay immediately halts foreclosure proceedings. Chapter 13 allows you to catch up on missed mortgage payments over a 3-5 year plan while keeping your home.

Are student loans dischargeable? Generally no, but in rare cases where repayment would cause “undue hardship” (under the Brunner test), partial or full discharge may be possible through an adversary proceeding.

Contact a Pennsylvania Bankruptcy Attorney

If you are considering bankruptcy in Pennsylvania, Maryland, New York, or New Jersey, contact Siddons Law Firm for a free, confidential consultation. With over 20 years of experience, Martindale-Hubbell AV Preeminent rating, and AVVO 10.0 “Superb” score, Attorney Siddons provides expert guidance through every step of the bankruptcy process.

Call (610) 255-7500 today for your free consultation. Our 25% contingency fee structure means you keep more of your fresh start.

Offices: Media, PA (main) | Rising Sun, MD | Staten Island, NY