"The Pennsylvania Chapter 7 Bankruptcy Exemptions
When you file for Chapter 7 bankruptcy protection, you have the option to choose the federal exemption standard or the state exemption.
In Pennsylvania, the state exemption is $300 for an individual or $600 for a couple filing bankruptcy. The state exemptions also include workers’ compensation benefits or disability insurance payments, as well as pension and retirement accounts.
Under the federal exemption, you are allowed:
Up to $17,425 in any real property that you use as a primary residence
Up to $2,775 of the value of a motor vehicle
$450 on any household furnishing up to a total of $9,300
$925 additional personal property exemption, up to a total of $8,725
All Social Security, unemployment, welfare, veterans or disability benefits
Child support and pension benefits"
So, it looks like the best bet is to load up your pension, retirement accounts and obtain disability benefits. Doesn’t seem like retirement accounts are exempt under federal law unless they qualify as pensions. What are the best states for BK exemptions? Do any exempt annuities not connected to a retirement account?
What would be the biggest 2 or 3 downfalls that I could have DH tell his friend about bankruptcy?
A drawback is that some employers review credit scores/credit reports when deciding whether to extend a job offer to an applicant. At least I know one of my previous employers did. You had to agree getting your credit report pulled as part of the background check. This was in Oregon.
For a while, maybe still, a dining room table was exempt in Louisiana. I think the test case was a guy with a $200,000 table that formerly belonged to French royalty. Now I suspect you only get xxx equity in a table.
It is an interesting point, since many of us thanks to App O Rama and churning have access to many times their income in unsecured credit lines. I value my credit, but it has crossed my mind to spend several hundred thousand on H&B and just declare bankruptcy. You might have to pay for a few months of minimum payments to make it less obvious but if the credit card companies are stupid enough to extend all these credit lines then why not? Or, if I were to be diagnosed with a terminal illness yet had all my mental faculties, to start writing those credit card balance transfer checks and play Robin Hood. If I die, I would distribute all my investments, and then some, to worthy individuals and causes. If for some reason I recover, then declare bankruptcy.
The same might be a viable strategy for nursing care - keep writing those balance transfer checks (and saving a bit of money to make a few months of minimum payments) to avoid being placed into a Medicaid nursing home for as long as possible. Taking out a quarter million in BT checks might be a cheaper option than paying for a nonrefundable $25,000 bail bond premium if one were falsely accused (although one’s attorney would likely have to arrange that). High credit lines, built over a long period of time, allow the average person to go “negative” longer than someone who forsakes credit.
OP, bankruptcy attorney here. IAAL, IANYL, etc.
Bankruptcy (hereinafter “BK”) is a useful tool for some. Rule of thumb is that if you’re in debt and you can’t pay it off within 2 years, then BK COULD be for you. The real key is to maximize your exemptions (exemption planning) well in advance of BK. Most people file BK when they’ve got no meal ticket. The far better approach is to work with a BK attorney about 6-9 months out and get a plan in place to maximize your available exemptions (and though they’re not supposed to tell you this, also maximize your dischargeable debt) for when you do file your petition.
Think of it as a strategic walkaway that tips the risk scales in your favor because you have a parachute.
Finally, an oft repeated phrase in BK litigation: "BK is for the honest but unfortunate debtor[.]. Plan accordingly. Be happy.
Depends on the job. There are some federal regulations in place for people in certain (regulated) sectors that CANNOT get a job after a bankruptcy filing. I believe that investment banking is one such area. Other jobs that require a high degree of financial trust may also discriminate. But in general, it’s not a problem.
I’m guessing that’s really the basis of the OP’s original point. (Feel free to correct me if I’m wrong.)
My takeaway was that these people are willfully spending way more than their income can handle knowing and expecting that someone other than them is going to pay the price. Their attitude is, “So, it’s all good and not our problem and we’re going to do it as long as we can.”
That’s really different from someone who genuinely has fallen on hard times and needs a do-over.
It’s hard to get jobs in the finance industry or government. Specifically it can be difficult to get a security clearance if you have filed bankruptcy in the past.
It happens all the time. But BK allows people to do this, and it’s built into the law. There is a legally-significant difference between this attitude of indifference and committing fraud. In the late 90s in my Circuit, the Court of appeals allowed a debtor to discharge credit card advances that she received from a gambling casino lobby. (And then she promptly went to use that money to feed her gambling addiction.) Because she had intended to repay it, and because she had a mental condition (gambling), the court decided that there wasn’t fraud.
One thing that a bankruptcy won’t stop though is (corporate) memory. If you burn Amex with a bankruptcy, good luck getting another credit card from them.
Generally, if it doesn’t fall within the exceptions to discharge, it is dischargeable.
Examples include most unsecured debt, cramdowns between the present value of your car and the amount you owe on it (ex: you contracted for a 30K car, and it’s now worth 12K. You still owe 22K. You only have to pay 12K, and the bank loses the right to collect the rest, even though it’s secured.), some non-spousal support obligations post-divorce, medical debts, money you borrowed from the mafia, etc.
Depends on a lot of factors, including timing of transfer, who benefits under the trust, whether it’s irrevocable, etc. Ask a bankruptcy professional in your jurisdiction.
