Financial problems can cause tremendous stress for many Pennsylvania families. Suddenly, bills begin to pile up and creditors start to call. Often, it doesn't seem like there will ever be any relief. For some, gradually paying down the debt is the answer; however, for others, the debt is too much to handle and filing for bankruptcy may be their best option.
Chapter 7 bankruptcy allows the individual to relinquish debt by filing for bankruptcy protection. In this case, the individual is protected from creditors for the amount that they owe. However, the individual typically cannot just walk away from the debt with no repercussions. With Chapter 7 bankruptcy, it is likely that a substantial portion of the individual's assets will be turned over to the bankruptcy estate.
Assets that are to be turned over to the bankruptcy estate include those that are considered non-exempt. These typically include a second vehicle, a vacation home, musical instruments, valuable collections, cash and investment accounts. Non-exempt assets are transferred to the bankruptcy estate and then sold to pay a portion of the debt.
Assets that the individual keeps are known as exempt assets. These typically include part of the equity in a home, pensions, jewelry, clothing and a vehicle. These items, as well as a few others, are considered necessities; therefore, they are exempt from being included in the bankruptcy estate.
There are usually many questions and concerns when a Pennsylvania resident considers filing for bankruptcy. There are several different forms of bankruptcy to consider. An experienced bankruptcy attorney can assist in determining which form best meets an individual's needs.
Source: bankruptcy.findlaw.com, "Exempt vs. Non-exempt Property Under Chapter 7", Accessed on Dec. 7, 2016