Pennsylvania Bankruptcy Laws : Pennsylvania State Exemptions

Complete state of Pennsylvania bankruptcy exemptions laws which protect a debtor’s property when personal bankruptcy is filed.

§ 8124. Exemption of particular property.

(a) Goods.–The following personal property of the judgment debtor shall be exempt from attachment or execution on a judgment:

(1) Wearing apparel.
(2) Bibles and school books.
(3) Sewing machines belonging to seamstresses or used and owned by private families, but not including sewing machines kept for sale or hire.
(4) Uniforms and accoutrements as provided by 51 Pa.C.S. § 4103 (relating to exemption of uniforms and equipment).

(b) Retirement funds and accounts.

(1) Except as provided in paragraph (2), the following money or other property of the judgment debtor shall be exempt from attachment or execution on a judgment:

(i) Certain amounts payable under the Public School Employees’ Retirement Code as provided by 24 Pa.C.S. §8533 (relating to taxation, attachment and assignment of funds).
(ii) Certain amounts payable under the State Employees’ Retirement Code as provided by 71 Pa.C.S. §5953 (relating to taxation, attachment and assignment of funds).
(iii) The retirement allowance provided for in the act of May 24, 1893 (P.L.129, No.82).
(iv) Compensation or pension provided for in the act of May 20, 1915 (P.L.566, No.242).
(v) Compensation or pension provided for in the act of May 28, 1915 (P.L.596, No.259).
(vi) The retirement allowance, contributions and returned contributions under the act of February 1, 1974(P.L.34, No.15), known as the “Pennsylvania Municipal Retirement Law.”
(vii) Any pension or annuity, whether by way of a gratuity or otherwise, granted or paid by any private corporation or employer to a retired employee under a plan or contract which provides that the pension or annuity shall not be assignable.
(viii) Any retirement or annuity fund of any self- employed person (to the extent of payments thereto made while solvent, but not exceeding the amount actually excluded or deducted as retirement funding for Federal income tax purposes) and the appreciation thereon, the income therefrom and the benefits or annuity payable thereunder.
(ix) Any retirement or annuity fund provided for under section 401(a), 403(a) and (b), 408, 408A, 409 or 530 of the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 401(a), 403(a) and (b), 408, 408A, 409 or 530), the appreciation thereon, the income therefrom, the benefits or annuity payable thereunder and transfers and rollovers between such funds. This subparagraph shall not apply to:

(A) Amounts contributed by the debtor to the retirement or annuity fund within one year before the debtor filed for bankruptcy. This shall not include amounts directly rolled over from other funds which are exempt from attachment under this subparagraph.
(B) Amounts contributed by the debtor to the retirement or annuity fund in excess of $15,000 within a one-year period. This shall not include amounts directly rolled over from other funds which are exempt from attachment under this subparagraph.
(C) Amounts deemed to be fraudulent conveyances.

(2) The exemptions provided by paragraph (1)(i) through (vi) shall be subject to any inconsistent provision of the act of July 8, 1978 (P.L.752, No.140), known as the “Public Employee Pension Forfeiture Act.”

(c) Insurance proceeds.–The following property or other rights of the judgment debtor shall be exempt from attachment or execution on a judgment:

(1) Certain amounts paid, provided or rendered by a fraternal benefit society as provided by 40 Pa.C.S. § 6531 (relating to benefits not attachable).
(2) Claims and compensation payments under the act of June 2, 1915 (P.L.736, No.338), known as “The Pennsylvania Workmen’s Compensation Law,” except as otherwise provided in the act.
(3) Any policy or contract of insurance or annuity issued to a solvent insured who is the beneficiary thereof, except any part thereof exceeding an income or return of $100 per month.
(4) Any amount of proceeds retained by the insurer at maturity or otherwise under the terms of an annuity or policy of life insurance if the policy or a supplemental agreement provides that such proceeds and the income therefrom shall not be assignable.
(5) Any policy of group insurance or the proceeds thereof.
(6) The net amount payable under any annuity contract or policy of life insurance made for the benefit of or assigned to the spouse, children or dependent relative of the insured, whether or not the right to change the named beneficiary is reserved by or permitted to the insured. The preceding sentence shall not be applicable to the extent the judgment debtor is such spouse, child or other relative.
(7) The net amount payable under any accident or disability insurance.
(8) Certain amounts paid, provided or rendered by a fraternal benefit society as provided by section 305 of the act of July 29, 1977 (P.L.105, No.38), known as the “Fraternal Benefit Society Code.”
(9) Certain amounts paid, provided or rendered under the provisions of section 106(f) of the act of July 19, 1974 (P.L.489, No.176), known as the “Pennsylvania No-fault Motor Vehicle Insurance Act.”
(10) Certain amounts paid, provided or rendered under the provisions of section 703 of the act of December 5, 1936 (2nd Sp.Sess., 1937 P.L.2897, No.1), known as the “Unemployment Compensation Law.”

§ 8127. Personal earnings exempt from process.

(a) General rule and exceptions.–The wages, salaries and commissions of individuals shall while in the hands of the employer be exempt from any attachment, execution or other process except upon an action or proceeding:

(1) Under 23 Pa.C.S. Pt. IV (relating to divorce).
(2) For support.
(3) For board for four weeks or less.

(3.1) For amounts awarded to a judgment creditor-landlord arising out of a residential lease upon which the court has rendered judgment which is final. However, the amount subject to attachment shall have deducted from it any security deposit held by the judgment creditor-landlord and forfeited by the judgment debtor-tenant under section 511.1 of the act of April 6, 1951 (P.L.69, No.20), known as The Landlord and Tenant Act of 1951, unless the security deposit has been applied to payment of rent due on the same premises for which the judgment for attachment has been entered. The judgment creditor-landlord shall have the burden of proving that such security deposit has been applied to payment of rent due on the premises herein described. The sum attached shall be no more than 10% of the net wages per pay period of the judgment debtor-tenant or a sum not to place the debtor’s net income below the poverty income guidelines as provided annually by the Federal Office of Management and Budget, whichever is less. For the purposes of this paragraph, “net wages” shall mean all wages paid less only the following items:

(i) Federal, State and local income taxes.
(ii) F.I.C.A. payments and nonvoluntary retirement payments.
(iii) Union dues.
(iv) Health insurance premiums.

(3.2) In the case of wage attachment arising out of a residential lease, to implement the wage attachment, the judgment creditor-landlord shall comply with the Pennsylvania Rules of Civil Procedure and any applicable local rules. The judgment of the magisterial district judge, magistrate or any other court having jurisdiction over landlord and tenant matters or a judgment before the court of common pleas shall reflect that portion of the judgment which is for physical damages arising out of a residential lease.

(4) Under the act of August 7, 1963 (P.L.549, No.290), referred to as the Pennsylvania Higher Education Assistance Agency Act.
(5) For restitution to crime victims, costs, fines or bail judgments pursuant to an order entered by a court in a criminal proceeding.

(b) Priority.–An order of attachment for support shall have priority over any other attachment, execution, garnishment or wage assignment.
(c) Duty of employer.

(1) For any wage attachment arising out of a residential lease, the employer shall send the attached wages to the prothonotary of the court of common pleas within 15 days from the close of the last pay period in each month. The employer shall be entitled to deduct from the moneys collected from each employee the costs incurred from the extra bookkeeping necessary to record such transactions, not exceeding $5 of the amount of money so collected. If an employer is served with more than one attachment arising out of a residential lease against the same judgment debtor, then the attachments shall be satisfied in the order in which they were served. Each prior attachment shall be satisfied before any effect is given to a subsequent attachment, subject to subsection (a)(3.2). Upon receipt of the wages, the prothonotary of the court of common pleas shall record and send said wages to the judgment creditor-landlord.
(2) For any wage attachment not arising out of a residential lease, the employer shall send the attached withheld wages to the prothonotary of the court of common pleas to be recorded, and upon receipt, the wages shall be sent to the creditor.

(d) Duty of judgment creditor-landlord.

(1) Any judgment creditor-landlord who has received satisfaction of any judgment pursuant to this section shall enter satisfaction in the office of the clerk of the court where such judgment is outstanding, which satisfaction shall forever discharge the judgment.
(2) A judgment creditor-landlord who shall fail or refuse for more than 30 days after receiving satisfaction to comply with paragraph (1) shall pay to the judgment debtor-tenant as liquidated damages 1% of the original amount of the judgment for each day of delinquency beyond such 30 days but not more than 50% of the original amount of the judgment. Such liquidated damages shall be recoverable pursuant to general rules, by supplementary proceedings in the matter in which the judgment was entered.

(e) Prohibition against discharge.–The employer shall not take any adverse action against any individual solely because his wages, salaries or commissions have been attached.
(f) Victim of abuse.–This section shall not apply and no wage attachment shall be issued against an abused person or victim, as defined in 23 Pa.C.S. § 6102 (relating to definitions), for physical damages related to residential leases when said person has obtained a civil protection order pursuant to 23 Pa.C.S. § 6101 et seq. (relating to protection from abuse), or has obtained a protective order pursuant to 18 Pa.C.S. § 4954 (relating to protective orders), or is a victim-witness as defined by 18 Pa.C.S. § 4951 (relating to definitions), in a criminal proceeding against a family or household member, as defined in 23 Pa.C.S. § 6102, and it is determined by the court that the physical damages were caused by the family or household member.
(g) Application of section.–This section shall apply to all judgments which remain unsatisfied or arise on or after the effective date of this subsection.
(h) Definition.–For purposes of this section, “physical damages” shall mean the abuse of the physical makeup of the leasehold premises. The term shall include, but not be limited to, the abuse of walls, floors, ceilings or any other physical makeup of the leasehold premises.

§ 8123. General monetary exemption

(a) General rule.–In addition to any other property specifically exempted by this subchapter, property of the judgment debtor (including bank notes, money, securities, real property, judgments or other indebtedness due the judgment debtor) to the value of $300 shall be exempt from attachment or execution on a judgment. Within such time as may be prescribed by general rules the judgment debtor may claim the exemption in kind and may designate the specific items of property to which the exemption provided by this section shall be applicable unless the designated property is not capable of appropriate division, or the judgment debtor may claim the exemption in cash out of the proceeds of the sale.
(b) Exception.–Subsection (a) shall not apply to any judgment:

(1) For support.
(2) Debtor who is not an individual.
(3) Obtained for board for four weeks or less.
(4) For $100 or less obtained for wages for manual labor.
(5) Obtained in foreclosing a mortgage secured upon real property whether the judgment is by an action in mortgage foreclosure or an action on a note, bond or other evidence of indebtedness accompanying a mortgage. The exception to the general monetary exemption provided for in this paragraph shall be limited to the real property secured by the mortgage. The exception shall not apply to any deficiency judgment.

(c) Executions issued by minor judiciary.–As to executions issued by the minor judiciary the amount of the exemption specified in subsection (a) shall be reduced by the value of any real or personal property of the judgment debtor which is generally subject to attachment or execution but which by law is not subject to attachments or executions issued by the minor judiciary.

§ 8342. Nature of right of partner in specific partnership property

(a) General rule.–A partner is co-owner with his partners of specific partnership property, holding as a tenant in partnership.
(b) Incidents of tenancy.–The incidents of this tenancy are as follows:

(1) A partner, subject to the provisions of this chapter and to any agreement between the partners, has an equal right with his partners to possess specific partnership property for partnership purposes, but he has no right to possess the property for any other purpose without the consent of his partners.
(2) The right of a partner in specific partnership property is not assignable except in connection with the assignment of the rights of all partners in the same property.
(3) The right of a partner in specific partnership property is not subject to attachment or execution except on a claim against the partnership. When partnership property is attached for a partnership debt, the partners, or any of them, or the representatives of a deceased partner, cannot claim any right under the homestead or exemption laws.
(4) On the death of a partner, his right in specific partnership property vests in the surviving partner or partners, except where the deceased was the last surviving partner, when his right in the property vests in his legal representative. The surviving partner or partners, or the legal representative of the last surviving partner, has no right to possess the partnership property for any but a partnership purpose.
(5) The right of a partner in specific partnership property is not subject to dower, curtesy or allowances to surviving spouses, heirs or next of kin.

§ 8533. Taxation, attachment and assignment of funds. (Public School Employees)

(a) General rule.–Except as provided in subsections (b), (c) and (d), the right of a person to a member’s annuity, a State annuity, or retirement allowance, to the return of contributions, any benefit or right accrued or accruing to any person under the provisions of this part, and the moneys in the fund are hereby exempt from any State or municipal tax, and exempt from levy and sale, garnishment, attachment, or any other process whatsoever, and shall be unassignable.
(b) Forfeiture.–Rights under this part shall be subject to forfeiture as provided by the act of July 8, 1978 (P.L.752, No.140), known as the Public Employee Pension Forfeiture Act. Forfeitures under this subsection or under any other provision of law may not be applied to increase the benefits that any member would otherwise receive under this part.
(c) Domestic relations order.–Rights under this part shall be subject to attachment in favor of an alternate payee as set forth in an approved domestic relations order.
(d) Direct rollover.–Effective with distributions made on or after January 1, 1993, and notwithstanding any other provision of this part to the contrary, a distributee may elect, at the time and in the manner prescribed by the board, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan by way of a direct rollover. For purposes of this subsection, a “distributee” includes a member and a member’s surviving spouse and a member’s former spouse who is an alternate payee under an approved domestic relations order. For purposes of this subsection, the term “eligible rollover distribution” has the meaning given such term by IRC § 402(f)(2)(A) and “eligible retirement plan” has the meaning given such term by IRC § 402(c)(8)(B), except that a qualified trust shall be considered an eligible retirement plan only if it accepts the distributee’s eligible rollover distribution; however, in the case of an eligible rollover distribution to a surviving spouse, an eligible retirement plan is an “individual retirement account” or an “individual retirement annuity” as those terms are defined in IRC § 408(a) and (b).

§ 5953. Taxation, attachment and assignment of funds. (State Employees)

(a) General rule.

(1) Except as provided in paragraphs (2), (3) and (4), the right of a person to any benefit or right accrued or accruing under the provisions of this part and the moneys in the fund are hereby exempt from any State or municipal tax, levy and sale, garnishment, attachment, spouse’s election, or any other process whatsoever except for a set-off by the Commonwealth in the case provided in subparagraph (i), and shall be unassignable except:

(i) To the Commonwealth in the case of a member who is terminating State service and has been determined to be obligated to the Commonwealth for the repayment of money owed on account of his employment or to the fund on account of a loan from a credit union which has been satisfied by the board from the fund.
(ii) To a credit union as security for a loan not to exceed $750 and interest not to exceed 6% per annum discounted and/or fines thereon if the credit union is now or hereafter organized and incorporated under the laws of this Commonwealth and the membership of such credit union is limited solely to officials and employees of the Commonwealth and if such credit union has paid to the fund $3 for each such assignment.

(2) Rights under this part shall be subject to forfeiture as provided by the act of July 8, 1978 (P.L.752, No.140), known as the Public Employee
Pension Forfeiture Act, and by or pursuant to section 16(b) of Article V of the Constitution of Pennsylvania. Forfeitures under this subsection or under any other provision of law may not be applied to increase the benefits that any member would otherwise receive under this part.
(3) Rights under this part shall be subject to attachment in favor of an alternate payee as set forth in an approved domestic relations order.
(4) Effective with distributions made on or after January 1, 1993, and notwithstanding any other provision of this part to the contrary, a distributee may elect, at the time and in the manner prescribed by the board, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan by way of a direct rollover. For purposes of this paragraph, a “distributee” includes a member and a member’s surviving spouse and a member’s former spouse who is an alternate payee under an approved domestic relations order. For purposes of this paragraph, the term “eligible rollover distribution” has the meaning given such term by IRC § 402(f)(2)(A), and “eligible retirement plan” has the meaning given such term by IRC § 402(c)(8)(B), except that a qualified trust shall be considered an eligible retirement plan only if it accepts the distributee’s eligible rollover distribution; however, in the case of an eligible rollover distribution to a surviving spouse, an eligible retirement plan is an “individual retirement account” or an “individual retirement annuity” as those terms are defined in IRC § 408(a) and (b).

(b) Authorized payments from fund.–The board shall be authorized to pay from the fund:

(1) In the case of a member who is terminating service, the amount determined after certification by the head of the department that the member is so obligated, and after review and approval by the department or agency’s legal representative or upon receipt of an assignment from the member in the amount so certified.
(2) In the case of a loan the amount of the loan and any fine or interest due thereon to the credit union except 5% of the total amount due which is to be retained in the fund as a collection fee:

(i) if the member obtaining the loan shall have been in default in required payments for a period of not less than two years; or
(ii) at such time as the Department of Banking shall require the credit union to charge the amount of the loan against the reserve fund of such credit union. Any member who shall have pledged such rights as security for a loan from a credit union and, on whose behalf the board shall have made any payment by reason of that member’s default, may not thereafter pledge or assign such rights to a credit union.

Note: While this reference information is current as of August 2010, it may not reflect the most up-to-date exemption figures on official state of Pennsylvania bankruptcy court statutes.

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