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  Bankruptcy is a legal proceeding that is provided by United States federal law. Because it is a federal procedure, bankruptcy takes place in federal bankruptcy court. However, even though bankruptcy is a federal procedure, state law is still critical to how your bankruptcy affects you. Most importantly, Pennsylvania state law controls what exemptions you can claim, and in what amount.
  
  

Exemptions Generally

• In Pennsylvania, you can claim exemptions either under federal law or under Pennsylvania state laws. You can choose whichever option works out in your favor.
  
  Although your property is not sold or seized in a Chapter 13 bankruptcy, exemptions still play an important role. To qualify for a Chapter 13 repayment plan, you have to be able to show that your creditors will receive at least as much payment under your Chapter 13 plan as they would have received in a Chapter 7 liquidation. In other words, even in Chapter 13, you still have to calculate the value of your bankruptcy estate, and knowing your exemptions is critical in that calculation.
  
  

Exemption Amounts in Pennsylvania

• Pennyslvania state law for exemptions in a Chapter 13 bankruptcy is not very generous and is fairly complex. In most cases, it makes more sense to elect for the federal exemptions.
  
  Pennsylvania state law, for example, does not allow for a homestead exemption or an automobile exemption. This means you get no exemption under Pennsylvania state law for your home or your car. Pennsylvania law does allow for some exemptions for insurance proceeds, retirement accounts, work tools, wages and clothing, but the amounts are low and it often takes a complex calculation to figure out the amounts. If you file for Chapter 13 in bankruptcy and you want to claim Pennsylvania state exemptions, you will probably need an attorney to help sort out what you qualify for.
  
  

Court Locator

• Even though bankruptcy takes place in a federal bankruptcy court, where you live in Pennsylvania determines where you will file your Chapter 13 bankruptcy petition. There are four bankruptcy courts in Pennsylvania. You can use the court locator link provided in the Resource section to find the appropriate court for where you live.