In short: Filing bankruptcy with a house in Philadelphia is usually a question of equity, the exemption you can claim, and whether the mortgage is current. Pennsylvania does not have its own bankruptcy homestead exemption. A filer chooses either the Pennsylvania exemption list or the federal list, and cannot mix the two. The federal homestead exemption under 11 U.S.C. § 522(d)(1) protects $31,575 of equity in a primary residence for cases filed from April 1, 2025 through March 31, 2028. Spouses who own the home together and file together can often double that to $63,150. Equity above the exemption can be at risk in a Chapter 7. A Chapter 13 plan is the usual way to catch up missed mortgage payments and keep the house. This is general information, not a prediction about your house. Call (215) 774-3916 for a free consultation with Cibik Law, P.C.
A rowhome in South Philadelphia, a twin in the Northeast, or a house in a nearby suburb can be the reason someone waits too long to ask. They have heard that “you lose the house if you file.” That sentence is too simple. Some people keep the house. Some people should not file Chapter 7 because the equity is too high. Some people are already in a sheriff’s sale timeline and need the automatic stay before anything else. The right chapter depends on numbers, not on a slogan.
Nothing on this page is legal advice. Exemption dollar amounts change on a schedule, and a lawyer has to apply the figure that is in force on the day a case is filed. The figures below are the federal amounts in effect for cases filed on or after April 1, 2025, until the next adjustment on April 1, 2028. Confirm them before you file.
Equity is what is left after you subtract the real liens from a realistic value. A realistic value is not the highest number an online estimator shows on a good week. It is closer to what a buyer would pay, after you account for condition.
Write the math in one line:
A house “worth” $280,000 with a $260,000 mortgage has about $20,000 of equity, not $280,000 of exposure. A house worth $280,000 with a $90,000 mortgage has a very different problem. People mix those two situations up, and the chapter choice follows the mix-up.
Philadelphia assessments and online estimates are starting points. If you moved from another state in the last couple of years, the exemption menu can be the other state’s. Individuals who live in Philadelphia file in the United States Bankruptcy Court for the Eastern District of Pennsylvania. A short comparison of the two chapters is in Chapter 7 vs. Chapter 13 in Pennsylvania.
Pennsylvania lets a bankruptcy filer choose one complete set of exemptions: the state list, or the federal list in 11 U.S.C. § 522(d). You do not get to take the federal homestead and then keep a Pennsylvania-only exemption on the side. It is one menu.
The state menu does not include a homestead exemption for the equity in your home. The familiar “homestead exclusion” on a Pennsylvania property-tax bill is a tax program. It does not protect equity in bankruptcy court.
For most homeowners who have equity they need to protect, the practical choice is the federal list, because that is the list with a homestead exemption. Choosing the federal list means the rest of the exemptions — car, household goods, the wildcard — also come from the federal list. A lawyer runs both menus against your actual property before anyone files. The house is usually the item that decides the menu. It is not the only item.
For cases filed from April 1, 2025 through March 31, 2028, the federal homestead exemption is $31,575 of equity in real or personal property used as a residence. Spouses who own the home together and file a joint case can generally double it to $63,150. The statute is 11 U.S.C. § 522(d)(1). Those figures come from the three-year federal adjustment. They are not a Pennsylvania statute, and they will change again on April 1, 2028.
The exemption protects equity. It does not pay the mortgage, and it does not erase the lien. A mortgage lender still has a lien on the house after a bankruptcy is filed. If you want to keep the house, the loan still has to be dealt with: stay current, cure the arrears in a Chapter 13 plan, or reach some other agreement the lender will accept. “Exempt” does not mean “free and clear.”
The federal wildcard can sometimes add a slice of unused homestead exemption to other property. The household-goods caps and the vehicle cap are separate lines. Do not add them in your head and call the total “what I can keep in the house.” The homestead line is the house line. Everything else is a different box on the same form.
Chapter 7 is a liquidation chapter. The trustee’s job is to see whether there is non-exempt property that can be sold for creditors. If the equity in the Philadelphia house fits inside the exemption you claimed, and you can keep the mortgage current, people often keep the house through a Chapter 7. The discharge wipes many unsecured debts — credit cards, medical bills, personal loans — which can make the mortgage easier to pay because those other bills stop.
If the equity is clearly above the exemption, a Chapter 7 trustee can seek to sell the house, pay the mortgage, pay you the exempt amount, and distribute the rest. That is the outcome people are afraid of, and it is a real outcome when the equity is large and the case is a Chapter 7. It is not the outcome in every case. It is the reason a homeowner with $120,000 of equity should not file Chapter 7 just because a postcard said the word “fresh start.”
Chapter 13 is a payment plan, usually three to five years. Homeowners in Philadelphia use it for two house problems that Chapter 7 does not solve well.
Chapter 13 has a debt-limit and a regular-income requirement. If the mortgage arrears plus the other plan payments are more than the household can pay from real income, the plan fails later, which is harder than choosing a different path at the start. Bring pay stubs and the mortgage statement to the first meeting so the payment is calculated from paper, not from hope.
Filing a bankruptcy petition triggers the automatic stay. In a typical first filing, the stay stops a foreclosure sale that has not happened yet, including a Philadelphia sheriff’s sale that is on the calendar. It also stops most collection lawsuits and wage garnishments. How the stay works against calls, lawsuits, and garnishments is covered in the firm’s automatic-stay article, and the foreclosure-specific version is can bankruptcy stop foreclosure in Philadelphia.
The stay is not a title transfer. The house is still the house. The mortgage is still the mortgage. A lender can file a motion for relief from the stay, and the court can grant it if you are not adequately protecting the lender’s interest — most often, if you are not paying and you have no plan to cure.
The stay can also be weaker if you had another bankruptcy case dismissed in the recent past. A second filing within a year can limit the stay to 30 days unless the court extends it, and a third filing can mean there is no stay unless the court orders one. If a prior case was dismissed, say so at the first call. The sale date does not pause itself while someone hopes the rule does not apply.
The doubled homestead figure applies when both spouses file and both own the home. One spouse filing alone does not automatically get the doubled number. Married couples who hold the house as tenants by the entireties should ask about that deed before anyone treats it as a shield. It does not defeat a mortgage both spouses signed.
You do not need a perfect file. You do need the papers that show the house and the debt.
Taxes, support, and recent cash advances are not treated like an ordinary credit card. A house analysis that ignores a large tax lien is incomplete. Mention them.
A page cannot value your house or tell you the plan payment. The questions to bring in are: how much equity is there, which exemption menu applies on the filing date, and is the mortgage current? If a sale is already dated, the timing matters more than the wording.
Cibik Law, P.C. represents individuals and families across Philadelphia and the nearby counties. The first consultation is free for qualified Philadelphia-area residents, with offices in Philadelphia and King of Prussia, and there is no obligation to file. More about the practice is on the bankruptcy practice page.
Free consultation: (215) 774-3916. General information only. Every house, and every case, is different.
Often, yes, when the equity fits an exemption you can claim and the mortgage is handled. If the equity is far above the exemption, a Chapter 7 trustee may be able to sell the house. A Chapter 13 plan is the usual way to keep a house in that situation, if you can fund the plan.
No. Pennsylvania’s exemption list does not include a bankruptcy homestead exemption. The property-tax homestead exclusion is a different program and does not protect home equity in bankruptcy. Homeowners who need to protect equity generally choose the federal exemption list instead of the state list.
For cases filed from April 1, 2025 through March 31, 2028, the federal homestead exemption is $31,575. Spouses who own the home together and file together can generally double that to $63,150. The next federal adjustment is scheduled for April 1, 2028. Confirm the figure before you file.
In a typical first filing, the automatic stay stops a foreclosure sale that has not already happened. The stay does not erase the mortgage. The lender can ask the court to lift the stay, and a recent dismissed case can shorten or remove the stay unless the court orders otherwise.
Chapter 13 is the chapter that lets you catch up arrears over time while you keep making the regular payment. Chapter 7 can pause a sale, but it does not include a cure plan. The choice still depends on your income, the equity, and the rest of the debt.
Contact Us Today For A FREE CONSULTATION
