Pennsylvania Bankruptcy Law (PA)

How Pennsylvania law and income affect chapter and case selection

All Pennsylvania residents, as individuals, may file bankruptcy under Chapters 7, 11, 12 or 13, depending upon unique qualification requirements under each chapter type. Chapter 11 cases quite expensive compared to 7 and 13, and are the preferred method of reorganizing debts for wealthy individuals and corporations. Chapter 12 cases are reserved for individuals earning a regular income as a "family farmer" as defined by the Code.

Chapter 7 cases are preferred by most individuals, and are available to anyone earning less then the Pennsylvania median income. Chapter 7 discharges all debts without payment over a period of 4 months to 6 months in most cases. For this reason, most people prefer Chapter 7 over other chapters. Anyone who earns more than The Pennsylvania state statistical median must file a proposed plan under Chapter 13.

Chapter 13 plans last between 3 to 5 years, depending on the level of income, and especially, the disposable income of the debtor. These plans require monthly payments to a trustee for collection and disbursement to approved creditors. Priority debts are paid first, and general, unsecured creditors are paid last. At the end of the plan term, all debts are discharged and require no further payment.