You did everything you were supposed to do. You had health insurance. You paid your premiums every month. You showed up for preventive appointments. And then, one diagnosis, one accident, or one hospital stay changed everything. Now you’re staring at a stack of bills that don’t make sense, from providers you don’t recognize, for amounts your insurance was supposed to cover. Collection agencies are calling. Your credit score is dropping. And the financial life you worked so hard to build feels like it’s slipping away. If this sounds familiar, please know two things: you are not alone, and you have more options than you might think. The Medical Debt Crisis: A National Problem, Not a Personal Failure Medical debt has become one of the most widespread financial burdens in the United States. According to a KFF analysis published in early 2026, four in ten U.S. adults carry some form of healthcare debt, and two-thirds of Americans say healthcare costs are their top financial worry. A 2025 West Health-Gallup survey found that more than 31 million Americans borrowed approximately $74 billion in a single year just to pay for healthcare. These aren’t irresponsible spenders. These are working families, parents, teachers, and retirees who had the misfortune of getting sick or injured in a system where even insured patients face staggering out-of-pocket costs. High deductibles, surprise billing gaps, and the growing disconnect between what insurance covers and what providers charge have turned medical care into a financial minefield. In Pennsylvania and across the country, this crisis doesn’t discriminate. About half of all Americans say they could not afford an unexpected $500 medical bill without going into debt. If you’re struggling to keep up, it’s because the system created this problem. It’s not a reflection of who you are or how hard you’ve worked. How Medical Debt Affects Your Credit Understanding how medical debt shows up on your credit report is important, because the rules have shifted in recent years. Here’s where things stand today. The three major credit bureaus (Equifax, Experian, and TransUnion) have voluntarily removed some of the worst impacts. Medical debts under $500 that go to collections are no longer included on credit reports, and paid medical debts have been removed as well. Unpaid medical debt won’t appear on your report until it’s been in collections for at least one year. These changes alone eliminated about 70% of medical collection accounts from credit files. However, if you owe more than $500 in unpaid medical collections and the debt is more than a year old, it can still damage your credit significantly. The federal rule that would have banned all medical debt from credit reports was finalized in January 2025 but was overturned by a federal court in July 2025. While some states have passed their own protections, Pennsylvania does not currently have a state-level ban on medical debt credit reporting. The bottom line: medical debt can still hurt your credit score, make it harder to qualify for a mortgage or car loan, and even affect rental applications. If your medical debt exceeds what these voluntary protections cover, exploring your legal options becomes even more important. Option 1: Negotiate Directly with Your Providers Before exploring legal solutions, it’s worth understanding what you may be able to accomplish by working directly with your healthcare providers. Many people don’t realize that medical bills are often negotiable. Request an Itemized Bill Start by requesting a detailed, itemized statement from every provider. Billing errors are surprisingly common. Duplicate charges, incorrect codes, and services billed at the wrong rate happen more often than most patients realize. Review each line carefully and compare it to your Explanation of Benefits (EOB) from your insurer. Ask About Payment Plans Most hospitals and large medical practices will set up interest-free payment plans if you ask. Monthly payments of even $25 or $50 can keep your account from being sent to collections while you work out a longer-term solution. Be sure to get any agreement in writing. Negotiate a Reduced Settlement Providers would often rather accept a reduced lump sum than chase the full balance for months or years. If you can offer to pay a portion of the total upfront, many providers will accept 40% to 60% of the original bill. Contact the billing department, explain your financial situation, and ask whether they would consider a reduced payment to settle the account. When this works best: Negotiation is most effective when you have a single provider, a manageable total balance, and the ability to make at least some payment. When debt has accumulated from multiple providers, spans many months, or involves amounts far beyond your ability to pay, negotiation alone may not solve the problem. Option 2: Hospital Charity Care and Financial Assistance Here’s something most patients never learn: nonprofit hospitals are legally required to offer financial assistance programs. Under the Affordable Care Act, every tax-exempt hospital must maintain a written financial assistance policy (sometimes called charity care) and make it available to patients. The IRS requires these hospitals to publicize these programs widely and provide application materials to patients. These programs can reduce or completely eliminate your hospital bills based on your household income and family size. Eligibility thresholds vary by hospital, but many programs cover patients earning up to 200% to 400% of the federal poverty level. Some hospitals extend assistance even further when bills represent a significant percentage of a patient’s income. How to Apply Contact the hospital’s billing or financial counseling department and ask for their financial assistance application. You’ll typically need to provide proof of income (pay stubs, tax returns) and documentation of household size. Hospitals are required to give you at least 240 days from the first billing statement to apply, and many will accept applications even after that deadline has passed. Important: Charity care programs typically cover hospital bills only. They may not cover bills from physicians, anesthesiologists, radiologists, or other providers who billed separately for services provided during your hospital stay. Those providers may have their own financial assistance programs, so it’s worth asking each one individually. Option 3: Medical Debt Forgiveness Programs Several nonprofit organizations work to relieve medical debt for people who can’t afford to pay. The most prominent is Undue Medical Debt (formerly RIP Medical Debt), which purchases bundled medical debts at steep discounts and then forgives them entirely. As of early 2026, the organization has abolished over $25 billion in medical debt for more than 15 million people. State and local governments have also partnered with organizations like Undue to cancel medical debt using public funds. In Pennsylvania, the city of Pittsburgh partnered with Undue in 2025 to abolish more than $58 million in medical debt for over 43,000 residents. Important Limitations These programs provide real help, but they come with significant limitations. You cannot apply directly for debt relief through Undue Medical Debt. The organization identifies qualifying individuals based on income data and purchases debt from participating providers. There’s no guarantee your specific debt will be acquired, and the process can take months or years. These programs also tend to focus on older debts that have already been in collections. If you’re dealing with active collection calls, potential lawsuits, or wage garnishment threats right now, waiting for a forgiveness program may not be a realistic solution. Option 4: Bankruptcy as a Legal Tool for Complete Medical Debt Relief When negotiation, charity care, and forgiveness programs can’t resolve the full picture, bankruptcy offers something the other options can’t: a legally guaranteed path to eliminating your medical debt entirely. Medical debt is classified as non-priority unsecured debt under bankruptcy law. This means it can be completely discharged, with no cap on the amount. Whether you owe $10,000 or $200,000 in medical bills, bankruptcy can wipe the slate clean. And unlike debt forgiveness programs, bankruptcy is something you can initiate on your own timeline. The Automatic Stay: Immediate Relief The moment you file for bankruptcy, a legal protection called the automatic stay goes into effect. This is a court order that immediately stops all collection activity against you. No more phone calls from debt collectors. No more threatening letters. No more wage garnishment or lawsuits. The automatic stay gives you breathing room to work through the bankruptcy process without the constant stress of collection harassment. Chapter 7: Fast and Complete Elimination For many people dealing primarily with medical debt, Chapter 7 bankruptcy is the most straightforward path. The entire process typically takes three to four months from filing to discharge. Most filers keep all of their property under Pennsylvania’s generous exemption laws. You don’t negotiate with creditors, you don’t make monthly payments on old debts, and you emerge with your medical debt completely gone. Eligibility requires passing the bankruptcy means test, which looks at your income relative to Pennsylvania’s median. Chapter 13: Protect Your Assets While Eliminating Debt If your income is above the means test threshold, or if you need to catch up on a mortgage or car loan while also addressing medical debt, Chapter 13 bankruptcy creates a structured repayment plan lasting three to five years. Under this plan, your medical debt is classified as non-priority, which means it’s paid last (if at all) after secured debts and priority obligations. Many Chapter 13 filers pay little to nothing on their medical debt, and any remaining balance is discharged when the plan is complete. Your Medical Care Continues Filing for bankruptcy does not affect your ability to receive future medical care or maintain your health insurance. Your doctors cannot refuse to treat you because of a bankruptcy filing. Your health insurance through an employer, the marketplace, Medicare, or Medicaid remains fully intact. This is one of the most common fears people have, and it’s one of the easiest to put to rest. Making the Right Choice for Your Situation Every financial situation is different, and the right answer depends on the full picture of your circumstances. Consider these questions as a starting point: Is your medical debt the only financial challenge, or do you also carry credit card debt, personal loans, or other obligations? Are collection agencies actively pursuing you with calls, letters, or lawsuits? Is your credit already significantly damaged by unpaid medical collections? Do you have assets you want to protect, such as a home or vehicle? Is the total amount of debt realistic to pay down through negotiation or payment plans? If you owe more than you can realistically repay, if collectors are making your life stressful, or if your medical debt is just one layer of a larger financial problem, bankruptcy may be the most efficient and protective path forward. An experienced bankruptcy attorney can help you evaluate all your options and determine which approach gives you the strongest fresh start. Understand All Your Options. Take the First Step Today. Medical debt is a financial problem, not a character flaw. The law provides tools designed specifically to help people in your situation find relief and move forward. At the Law Offices of John M. Hyams, we’ve spent over 20 years helping people across Central Pennsylvania take control of overwhelming debt. 717.520.0300 Schedule Your Free Consultation ★ Simply the Best2020, 2024, 2025 7 Central PA Locations In-Person,Online, or Phone Keep everything you own. Get rid of your debt. Move on with your life.

Chapter 1 Understanding Your Situation You Are Not Alone If you are reading this guide, you are likely navigating two of life’s most difficult transitions at the same time: the end of a marriage and serious financial stress. The weight of it can feel unbearable. You may be losing sleep, struggling to focus at work, or wondering how you will keep your household running on a single income. First, take a deep breath. What you are experiencing is far more common than most people realize. Research consistently shows that divorce is one of the leading triggers for personal bankruptcy filings in the United States. Approximately 14% of bankruptcy filers identify divorce or separation as a primary reason for filing. You are not alone, and this is not your fault. Every year, thousands of Pennsylvania families face the intersection of divorce and financial hardship. They come from all walks of life: teachers, nurses, small business owners, construction workers, IT professionals, and retirees. There is no single profile for someone in this situation, and there is absolutely no shame in it. Why Divorce and Financial Crisis Go Hand in Hand Marriage is an economic partnership as much as an emotional one. When that partnership dissolves, the financial consequences can be profound and immediate. Two people who once shared one mortgage, one set of utility bills, and one grocery budget now need to maintain two separate households. The math often simply does not work, especially when legal fees, moving costs, and temporary living arrangements enter the picture. This is not a reflection of poor planning or irresponsible spending. It is the predictable financial reality of separating a shared life into two independent ones. What You Will Learn in This Guide This guide is designed to give you a clear, honest, and compassionate overview of how divorce and bankruptcy interact in Pennsylvania. You will learn: How divorce creates specific types of financial pressure The hidden dangers of joint debt after separation Whether to file bankruptcy before, during, or after divorce How to protect your home and your children’s stability What happens to child support and alimony in bankruptcy The difference between Chapter 7 and Chapter 13 for divorced individuals What the bankruptcy process actually looks like, step by step How to rebuild your financial life after a fresh start Knowledge is power. The more you understand about your options, the more confident and empowered you will feel as you make decisions about your future. This Guide Is a Starting Point Every family’s situation is unique. This guide provides general educational information about divorce and bankruptcy in Pennsylvania, but it does not replace personalized legal advice. Download Your Free Consultation Checklist Chapter 2 How Divorce Creates Financial Crisis Two Households, One Income Story The most immediate financial impact of divorce is deceptively simple: what once supported one household must now support two. Rent or mortgage payments, utilities, food, transportation, insurance, and childcare expenses effectively double, while combined income often stays the same or decreases. Consider a typical scenario. A couple with a combined household income of $85,000 per year was managing their bills, mortgage, and minimum credit card payments. After separation, each person now needs to cover independent housing costs, separate car insurance policies, individual health coverage, and the full burden of day-to-day expenses on roughly half the income. The budget shortfall is not a matter of if, but how much. The Division of Debts vs. Creditor Rights One of the most misunderstood aspects of divorce is what happens to shared debts. During divorce proceedings, the court will divide marital debts between the spouses. One spouse might be assigned responsibility for the credit card balance, while the other takes on the car loan. Here is the critical point that many people discover too late: your divorce decree does not change your obligations to creditors. If both names are on a credit card account, both people remain legally responsible to the credit card company, regardless of what the divorce agreement says. If your former spouse is ordered to pay a joint debt and stops making payments, the creditor will come after you for the full balance. This disconnect between family court orders and creditor rights is one of the most common reasons divorced individuals end up exploring bankruptcy protection. Legal Fee Accumulation Divorce itself is expensive. Attorney fees, court costs, mediation expenses, appraisals, and other professional fees can accumulate rapidly. Many people fund these costs through credit cards or personal loans, adding new debt on top of existing financial strain. In contested divorces, legal fees can reach tens of thousands of dollars, sometimes more than the assets being divided. Temporary Arrangements and the Transition Period The period between separation and a final divorce decree is often the most financially precarious. Temporary living arrangements, duplicate household expenses, storage costs, and the emotional disruption that affects work productivity all take their toll. Many people fall behind on mortgage payments, car loans, or credit cards during this transition period, creating a cascade of late fees, penalty interest rates, and collection activity. The Impossible Math When you add it all together, the financial equation after divorce often looks like this: reduced income, increased expenses, new debt from legal fees, ongoing joint debt obligations, and a depleted emergency fund. For many Pennsylvania families, this combination creates a financial hole that cannot be resolved through budgeting alone. This is where understanding your legal options becomes essential. Bankruptcy is a powerful federal legal tool designed precisely for situations like this. It is not a sign of failure. It is a strategic decision that can give you the financial breathing room you need to rebuild. Chapter 3 Joint Debt: The Hidden Problem Contract Law vs. Family Law: Two Different Systems To understand why joint debt is so dangerous after divorce, you need to understand a fundamental legal distinction. Family law (the system that governs your divorce) and contract law (the system that governs your agreements with creditors) operate independently. When you and your spouse signed a joint credit card agreement, you each made a separate, binding promise to the credit card company to repay the full balance. Your divorce attorney can negotiate how those debts are divided in your separation agreement, but the credit card company was not a party to your divorce. It is not bound by your divorce decree. Why Your Divorce Decree Does Not Fully Protect You Example: Your divorce decree orders your ex-spouse to pay the $15,000 joint credit card balance. Six months later, your ex-spouse stops making payments. The credit card company contacts you for the full $15,000. You are legally obligated to pay, regardless of what the divorce decree says. Your recourse is to go back to family court to enforce the decree against your ex-spouse, which costs additional time and money with no guarantee of collection. Common Scenarios That Create Problems Joint mortgages are among the most complex situations. Even if one spouse is awarded the home in the divorce, both names may remain on the mortgage until it is refinanced. If the spouse living in the home falls behind on payments, the other spouse’s credit is damaged and foreclosure can affect both parties. Joint auto loans present similar risks. If the spouse responsible for the car payment files their own bankruptcy or simply stops paying, the lender may pursue the other spouse or repossess the vehicle. Co-signed debts, including student loans, personal loans, and medical debt, follow the same pattern. The co-signer remains fully liable regardless of what the divorce agreement specifies. Your Actual Legal Exposure If you have significant joint debts from your marriage, your true financial exposure may be much larger than what appears on your personal budget. Every joint account represents a potential liability for the full balance, not just the portion assigned to you in the divorce. This is why many bankruptcy attorneys recommend that divorcing couples seriously consider addressing joint debts through bankruptcy, whether before or after the divorce is finalized. Bankruptcy can provide the only true discharge of joint debt obligations, eliminating both the debt and the creditor’s ability to pursue either party for collection. Concerned About Joint Debt From Your Marriage? Understanding your full financial exposure is the first step toward a solution. Attorney John M. Hyams can review your joint debts and explain your options. Schedule Your Free Consultation: 717.520.0300 Chapter 4 Timing Considerations One of the most important strategic decisions you will face is when to file for bankruptcy in relation to your divorce. The timing can significantly affect the cost, complexity, and outcome of both proceedings. There are three primary options, each with distinct advantages and potential drawbacks. Option 1: Filing Bankruptcy Before Divorce For many couples, filing a joint bankruptcy before starting divorce proceedings offers significant advantages. Potential benefits: Eliminates joint debts together, leaving far less to divide in the divorce Saves money by filing one case with one set of attorney fees instead of two separate cases In Pennsylvania, joint filers can double federal bankruptcy exemptions, protecting up to $63,150 in home equity Simplifies the divorce by removing most financial disputes from the settlement Chapter 7 cases typically conclude in three to four months, creating a clean financial slate before divorce negotiations begin Potential drawbacks: Requires cooperation between spouses, which may not be possible in high-conflict situations Combined household income may be too high to qualify for Chapter 7 under the means test The bankruptcy automatic stay temporarily pauses property division in the divorce Option 2: Filing Bankruptcy During Divorce Filing bankruptcy while a divorce is pending is generally the most complex approach and is rarely recommended: The bankruptcy automatic stay halts most civil proceedings, including aspects of the divorce related to property and debt division The two courts handle overlapping financial issues, creating jurisdictional complications Assets become part of the bankruptcy estate, preventing the divorce court from dividing them until the bankruptcy concludes However, the automatic stay does not stop proceedings related to child support, alimony, or child custody Option 3: Filing Bankruptcy After Divorce Filing individually after your divorce is finalized is a common and often practical approach. Potential benefits: Your individual income determines means test eligibility, which often makes it easier to qualify for Chapter 7 No cooperation with your former spouse is required You can address the specific debts assigned to you in the divorce, including joint debts your former spouse has stopped paying The divorce settlement is already finalized, providing clarity about your assets and obligations Potential drawbacks: Two separate bankruptcies cost more than one joint filing Joint debts remain collectible from either party until discharged You may have already suffered credit damage from missed payments during the divorce transition A Framework for Deciding Consider This If… Best Filing Timing Why You and your spouse cooperate and have significant joint debt Joint Chapter 7 before divorce Eliminates shared debt, saves legal fees, simplifies property division Combined income is too high for Chapter 7 Individual filing after divorce Lower individual income may qualify for Chapter 7; no spousal cooperation needed You need to save your home from foreclosure Chapter 13 after divorce (typically) Individual Chapter 13 plan based on your income; catch up mortgage arrears over 3 to 5 years High conflict situation, no cooperation possible Individual filing after divorce No dependence on your ex-spouse; file on your own terms and timeline Working with Both Legal Teams If you are facing both divorce and potential bankruptcy, the most important step you can take is to consult with both a family law attorney and a bankruptcy attorney early in the process. These two areas of law overlap in complex ways, and decisions made in one proceeding can significantly affect the other. Attorney John M. Hyams regularly coordinates with divorce attorneys throughout Central Pennsylvania to help clients navigate both processes strategically. Chapter 5 Protecting the Family Home For families going through divorce, the home is often the most emotionally and financially significant asset at stake. It represents stability, routine, and security for children. The good news is that bankruptcy law provides powerful tools for protecting your home, particularly when you are behind on mortgage payments. Chapter 13: Catching Up on Mortgage Arrears If you have fallen behind on your mortgage during the divorce transition, Chapter 13 bankruptcy offers a structured path to save your home. Under a Chapter 13 repayment plan, you can: Stop a foreclosure or sheriff sale immediately through the automatic stay Spread your past-due mortgage payments (arrears) over a three- to five-year repayment plan Continue making regular monthly mortgage payments going forward Potentially eliminate second mortgages or home equity lines of credit if your home is underwater Pennsylvania Exemption Considerations Pennsylvania does not have its own homestead exemption for bankruptcy purposes. However, Pennsylvania residents can choose to use the federal bankruptcy exemption system, which currently provides significant home equity protection. Federal Homestead Exemption (Current as of 2026): Individual filer: Up to $31,575 in home equity protected Married couple filing jointly: Up to $63,150 in home equity protected These amounts are updated every three years. Confirm current amounts at your filing date. Coordinating with Property Settlement When a home is part of a divorce property settlement, careful coordination is essential. If one spouse will keep the home, the property transfer, mortgage refinancing, and any necessary exemption analysis should be planned in consultation with both your divorce attorney and your bankruptcy attorney. Children’s Stability Comes First Throughout the process of divorce and bankruptcy, your children’s sense of stability and security should remain a central priority. If keeping the home is important for your family’s stability, make sure your legal team understands this priority. In many cases, a well-structured Chapter 13 plan can preserve the home while eliminating or restructuring other debts, creating a more manageable financial picture for your family going forward. Chapter 6 Child Support and Alimony One of the most common concerns for people considering bankruptcy during or after divorce is how it will affect child support and spousal support (alimony) obligations. The short answer is that these obligations are strongly protected under federal bankruptcy law. Non-Dischargeable Obligations Under Section 523(a)(5) of the U.S. Bankruptcy Code, domestic support obligations cannot be discharged in any chapter of bankruptcy. This includes: Child support (current and past-due) Spousal support or alimony (current and past-due) Any debt that the bankruptcy court determines is in the nature of support Priority Treatment in Bankruptcy In Chapter 7, support obligations are not affected by the bankruptcy at all In Chapter 13, past-due support payments must be paid in full through the repayment plan before any general unsecured creditors receive payment You must remain current on ongoing support payments throughout your Chapter 13 plan Automatic Stay Exceptions While the bankruptcy automatic stay halts most collection activity, there are specific exceptions for family support matters: Proceedings to establish or modify child support or alimony continue during bankruptcy Collection of support from property outside the bankruptcy estate continues Income withholding orders for ongoing support remain in effect Paternity, child custody, and domestic violence proceedings are not affected How Bankruptcy Can Indirectly Help While bankruptcy cannot discharge support obligations, it can make them more manageable. By eliminating credit card debt, medical bills, personal loans, and other unsecured debts through Chapter 7, or restructuring them through Chapter 13, you may free up enough monthly income to comfortably meet your support obligations. Many clients find that after bankruptcy eliminates their other debts, they can actually afford their support payments for the first time since the divorce. Chapter 7 Chapter 7 vs. Chapter 13 After Divorce Chapter 7 Bankruptcy: A Fresh Start Through Liquidation Chapter 7 eliminates most unsecured debts, including credit card balances, medical bills, personal loans, and utility arrearages, typically within three to four months. After divorce, Chapter 7 may be a good fit if: Your individual income falls below the Pennsylvania median for your household size You do not have significant at-risk assets Your primary debts are unsecured You want the fastest possible path to a clean financial slate Chapter 13 Bankruptcy: Structured Repayment and Asset Protection After divorce, Chapter 13 may be the better choice if: You are behind on your mortgage and need to save your home from foreclosure Your income is above the Chapter 7 means test threshold You have non-exempt property you want to keep You need to catch up on past-due car payments or tax obligations You want to eliminate certain property settlement obligations from your divorce Important: Under Chapter 13, certain debts arising from your divorce property settlement (as opposed to support obligations) may be dischargeable. This can be significant if your divorce decree assigned you responsibility for debts that are now overwhelming. Under Chapter 7, these same debts are generally not dischargeable. This is one reason why Chapter 13 can be strategically valuable after divorce. Strategic Considerations The choice between Chapter 7 and Chapter 13 depends on your specific financial picture. An experienced bankruptcy attorney can analyze your situation and recommend the chapter that provides the greatest benefit. In over 20 years of exclusively practicing bankruptcy law, Attorney John M. Hyams has helped thousands of Central Pennsylvanians navigate this exact decision. Chapter 8 What to Expect: The Process Chapter 7 Timeline Pre-filing credit counseling course (required, can be completed online) Petition filed with the bankruptcy court; automatic stay takes effect immediately Meeting of Creditors (Section 341 meeting) approximately 30 to 45 days after filing Debtor education course completed after filing Discharge granted approximately 60 to 90 days after the Meeting of Creditors Total process: typically three to four months from filing to discharge Chapter 13 Timeline Pre-filing credit counseling course Petition filed; automatic stay takes effect immediately Proposed repayment plan submitted Meeting of Creditors and plan confirmation hearing Monthly plan payments for three to five years Debtor education course and discharge upon plan completion Document Requirements Your bankruptcy attorney will need: Tax returns for the previous two years Pay stubs or proof of income for the previous six months Bank statements (typically three to six months) Mortgage, car loan, and other secured debt statements A complete list of all creditors with account numbers Monthly expense documentation Your divorce decree or separation agreement, if applicable Child support or alimony order documentation Working with Your Attorney Attorney John M. Hyams has devoted his entire career exclusively to the practice of bankruptcy law, with over 20 years of experience helping Central Pennsylvania families. His approach is built on the understanding that clients need both expert legal guidance and genuine empathy during one of the most stressful periods of their lives. Free consultations are available in person at any of seven Central Pennsylvania locations, online, or by phone. Chapter 9 Life After: The Fresh Start Credit Rebuilding Many clients are surprised to learn that credit rebuilding can begin immediately after their bankruptcy discharge. While a bankruptcy filing remains on your credit report for seven to ten years, its impact diminishes over time: Open a secured credit card and pay it off in full each month Ensure all post-bankruptcy payments are made on time Monitor your credit reports to confirm discharged debts are properly reported Avoid taking on unnecessary new debt Many former bankruptcy clients report qualifying for auto loans and even mortgages within two to three years of their discharge. Financial Independence After years of shared finances and the financial entanglement that comes with marriage, the fresh start that bankruptcy provides can feel liberating. You now have the opportunity to build your financial life from a clean foundation, with no lingering joint debts, no collection calls, and no anxiety about what your former spouse may or may not be paying. Your New Chapter You deserve financial peace. You deserve to sleep through the night without worrying about creditor calls. You deserve to focus on your children, your career, and your own well-being without the constant weight of unmanageable debt. That fresh start is available to you. It is not a distant dream. It is a legal right, protected by federal law, and achievable with the right guidance. Ready to Take the First Step? Schedule your free consultation with Attorney John M. Hyams. Meet in person at any of our seven Central Pennsylvania locations, connect online, or speak by phone. Schedule Your Free Consultation 717.520.0300 Appendix Consultation Preparation Checklist Bringing the following information to your free consultation will help Attorney Hyams evaluate your situation thoroughly. Personal Information Government-issued photo ID Social Security number Proof of current address Copy of your divorce decree or separation agreement (if finalized) Any pending divorce court orders Income Documentation Pay stubs from the last six months Tax returns for the last two years Documentation of any child support or alimony received Any other sources of income Debt Information Recent statements from all credit cards Mortgage statements and any foreclosure notices Car loan or lease agreements Medical bills (even those in collections) Student loan statements Personal loan documentation Collection letters or lawsuit notices Tax debts (IRS or Pennsylvania) Asset Information Current estimate of your home’s market value Vehicle titles and estimated values Bank account statements (last three months) Retirement account statements (401k, IRA, pension) Questions to Discuss What are my options for dealing with joint marital debts? Should I file before or after my divorce is finalized? Can I keep my home? My vehicle? How will bankruptcy affect my child support or alimony? What is the difference between Chapter 7 and Chapter 13 for my situation?

If you are struggling with debt right now, there is something I want you to hear before we go any further: this is not your fault. I know that might be hard to believe. Debt has a way of making you feel like a failure. It keeps you up at night, creates tension in your relationships, and turns everyday tasks like checking the mail or answering the phone into moments of dread. And underneath all of that stress, there is usually one persistent, painful thought: How did I let this happen? After more than 20 years of helping Central Pennsylvania families navigate financial crisis, I can tell you something with absolute certainty: good people end up in difficult financial situations every single day. The real story behind debt is almost always more complicated, and more compassionate, than blame allows. The Circumstances That Create Financial Crisis When most people imagine someone filing for bankruptcy, they picture someone who spent recklessly or lived beyond their means. The reality could not be more different. The vast majority of personal bankruptcies are triggered by events that are largely outside anyone’s control. Medical Emergencies Medical debt is the leading cause of financial hardship in the United States. According to a 2024 survey from the Consumer Financial Protection Bureau, more than one in three American households carry some form of medical debt. The Kaiser Family Foundation estimates that Americans owe at least $220 billion in medical debt overall. A West Health and Gallup survey found that approximately 31 million Americans borrowed a combined $74 billion in a single year just to cover healthcare costs. These are not people who avoided insurance or ignored their health. Many of them had coverage and still could not keep up with deductibles, copays, and surprise bills. A single hospital stay, an unexpected surgery, or a cancer diagnosis can generate tens of thousands of dollars in debt overnight. If you are dealing with medical debt and bankruptcy in Pennsylvania, you are far from alone. Divorce and Family Disruption Divorce is one of the most financially devastating events a person can experience. A household that was already stretched thin on two incomes suddenly becomes two households trying to survive independently. Legal fees accumulate. Joint debts remain, even when the marriage does not. Child support and spousal support obligations create new fixed expenses that leave little room for existing debt. Research consistently identifies divorce as one of the top triggers for personal bankruptcy, alongside medical bills and job loss. If you are navigating both at once, our guide to divorce and bankruptcy in Pennsylvania explains your options. Job Loss and Income Disruption In a survey by the Consumer Bankruptcy Project, 78% of people who filed for bankruptcy cited a decline in income as a contributing factor. Layoffs, company closures, reduced hours, and industry downturns can erase a family’s financial stability in weeks. And finding comparable employment takes time. During that gap, credit cards become lifelines, savings vanish, and bills pile up. This pattern has accelerated in recent years: U.S. bankruptcy courts reported 517,308 filings in 2024 alone, a 14.2% increase over the prior year. Business Failure According to data from the U.S. Bureau of Labor Statistics, nearly half of all small businesses fail within their first five years. That is not a reflection of poor character or lack of effort. It is the reality of entrepreneurship. Many business owners sign personal guarantees on leases, loans, and credit lines, which means that when the business fails, the debt follows them home. If you are a business owner facing personal guarantee debt, the law provides options you may not be aware of. Caring for Others Millions of Americans provide financial support for aging parents, adult children, or other family members who need help. These are acts of love and responsibility, not financial recklessness. But the costs of caregiving, from assisted living to medical equipment to simply covering an extra household, can quietly drain resources until there is nothing left. The System, Not Your Character Beyond these personal circumstances, there are broader forces at work that make financial crisis almost inevitable for many families. Credit card interest rates have risen sharply in recent years, and revolving consumer debt now exceeds $1.2 trillion nationwide. For households already managing tight budgets, even a small unexpected expense can push them past the breaking point when they are paying double-digit interest on existing balances. Healthcare costs in the United States remain the highest in the developed world, and the pricing is often opaque. Patients regularly receive bills for amounts they could never have predicted, from providers they did not choose, for services they were told would be covered. This is not a matter of personal irresponsibility. It is a system that routinely places ordinary families in impossible situations. Inflation, housing costs, and the steady erosion of real wages have compressed the margin for error in household budgets across the country. For millions of people, there is simply no cushion. One car repair, one missed paycheck, one medical bill can set off a chain reaction that leads to overwhelming debt. And none of that has anything to do with who you are as a person. Who Actually Files for Bankruptcy? If you think bankruptcy is only for people who have been financially irresponsible, consider who actually walks through my door. In my 20 years of practice, I have worked with teachers, nurses, doctors, police officers, and firefighters. I have helped small business owners who put everything they had into building something meaningful. I have sat across the table from military veterans returning home to financial chaos. I have guided single parents who were holding their families together through impossible circumstances. These are not irresponsible people. These are people from all walks of life who encountered circumstances that overwhelmed their financial resources. As I often tell clients who come into my office feeling ashamed: you are a good person who has had the same unforeseeable misfortune that so many others have experienced in their financial lives. National data confirms this. Women file at slightly higher rates than men, often due to medical expenses and the financial impact of divorce. The average person who files for bankruptcy is a working adult with some college education. Most have insurance. Most were employed. Most were doing everything they could to stay afloat before they finally sought help. The Founding Fathers Understood This Here is something that may surprise you: the right to file for bankruptcy is embedded in the United States Constitution. Article I, Section 8, Clause 4 of the Constitution gives Congress the power to establish “uniform Laws on the subject of Bankruptcies throughout the United States.” This was not an afterthought. The Founders, many of whom had personally witnessed the devastating effects of debtor’s prisons in England, intentionally built a mechanism for financial relief into the foundation of our nation. They understood that in a free economy, honest people will sometimes encounter circumstances that leave them unable to repay their debts. And they believed that those people deserved the opportunity to start fresh, rather than being crushed under obligations they could never meet. Bankruptcy is not a moral failing. It is a legal right, designed by the very people who built this country, for exactly the situations that many families face today. Walt Disney, Abraham Lincoln, Henry Ford, and countless other Americans who went on to do remarkable things first went through bankruptcy. The fresh start is an American tradition. Moving From Shame to Action Shame thrives in silence. As long as debt remains something you carry alone, something you do not talk about, something that makes you feel fundamentally flawed, it holds power over you. But here is what I have seen again and again over two decades of practice: the moment someone takes the first step toward addressing their situation, the shame begins to lose its grip. That first step does not have to be filing for bankruptcy. It can be as simple as learning what your options are. Maybe you discover that Chapter 7 could eliminate your unsecured debts entirely and give you a clean slate. Maybe Chapter 13 offers a way to save your home while reorganizing what you owe into a manageable plan. Maybe bankruptcy is not the right path for you at all, and there are other strategies that better fit your situation. The point is this: you cannot make an informed decision while you are trapped in shame. Knowledge is the antidote. When you understand your legal rights, when you see the full picture of what is available to you, you move from feeling powerless to feeling empowered. You stop being controlled by your debt and start taking control of your future. The Courage to Seek Help It takes real strength to ask for help. In a culture that treats financial difficulty as a personal failure, picking up the phone and calling a bankruptcy attorney is an act of courage, not weakness. It means you have decided that you and your family deserve better than living under the weight of debt you cannot repay. Every single day, people in Central Pennsylvania take that step. They walk into one of our seven offices feeling anxious, embarrassed, and uncertain. And they walk out with a plan, with relief, and with the knowledge that the law is on their side. That transformation never gets old. It is the reason I have devoted my entire career to this practice. Good People Face Difficult Circumstances. Let’s Talk. If anything in this article resonated with you, help is available and there is no judgment here. Our consultations are free, whether you meet with us in person at any of our seven Central Pennsylvania offices, online, or by phone. We will review your situation together, explain your options clearly, and help you understand what the law makes possible for your specific circumstances. No obligation. No pressure. No shame. You deserve to keep everything you own, get rid of your debt, and move on with your life. Schedule a Judgment-Free Consultation Call 717.520.0300 Simply the Best Award Winner:2020, 2024, 2025 7 CentralPA Locations 20+ YearsExclusive Bankruptcy Practice

If you have ever lain awake at 3 a.m. running the numbers in your head, you already know that debt is more than a financial problem. The weight shows up in your body, in your relationships, and in the way you move through each day. Your shoulders tense when the phone rings. Your stomach drops when you open the mailbox. The worry follows you to work, sits with you at the dinner table, and keeps you company long after the lights go out. You are not imagining it. The toll is real, and research confirms what millions of Americans already feel: overwhelming debt harms your mental and physical health in measurable, serious ways. But here is the part that rarely gets talked about: there is a legal tool designed to lift that weight. Bankruptcy is not a sign of failure. It is a path back to yourself. The Psychological Burden of Debt Chronic financial stress activates the same biological alarm systems as any other sustained threat. When you carry debt that feels unmanageable, your body responds with elevated cortisol, disrupted sleep, and a nervous system that rarely fully relaxes. Over time, that constant state of alert takes a toll that goes far beyond your bank account. Research published in Clinical Psychology Review found that individuals with unsecured debt were more than three times as likely to experience a mental health disorder compared to those without debt. The same study found a significant connection between debt and depression, anxiety, and substance use concerns. These are not small correlations. They reflect a powerful link between what you owe and how you feel. The effects ripple outward. Sleep disruption becomes the norm rather than the exception. Relationships strain under the pressure of arguments about money, avoidance, or the silent distance that shame creates. Work performance suffers when your mind is consumed by financial calculations instead of the task in front of you. Physical symptoms, including headaches, elevated blood pressure, and chronic fatigue, often accompany prolonged financial distress. A Johns Hopkins Bloomberg School of Public Health study found that adults experiencing depression or anxiety alongside medical debt were twice as likely to delay or forgo mental health care. When the very stress that harms your health also prevents you from seeking help, the cycle deepens. The Shame Cycle That Keeps People Stuck Perhaps the most damaging part of financial distress is not the debt itself but the story we tell ourselves about it. Society has attached deep moral judgment to money problems, and that judgment seeps inward. People who are struggling financially often feel that they should have been smarter, worked harder, or planned better. That internal narrative leads to shame, and shame leads to silence. When you feel ashamed, you hide. You stop opening bills. You avoid conversations with your spouse or partner. You decline invitations because you cannot afford to participate, or because you do not want anyone to see what you are going through. You may stop answering the phone entirely, letting creditor calls go to voicemail while your anxiety builds. This isolation makes everything worse. Without support, without information, and without a clear path forward, the shame compounds. Many people wait months or even years to seek legal help, not because solutions do not exist, but because shame tells them they do not deserve help. The truth is that you do. Financial hardship touches people from every background. At our firm, we work with clients from all walks of life: teachers, medical professionals, business owners, skilled tradespeople, and families who simply encountered circumstances beyond their control. Needing help is not a character flaw. It is a human experience. What Clients Tell Us About Finding Relief After more than 20 years of exclusively practicing bankruptcy law in Central Pennsylvania, one of the most consistent things we hear from clients is this: they wish they had come in sooner. Before filing, many describe a constant hum of anxiety that colored everything in their lives. They could not enjoy time with their children because their minds were elsewhere. They could not sleep without waking in a panic. They felt trapped in a situation with no exit. After filing, something shifts. Clients describe a physical sensation of relief, a lightness they had forgotten was possible. The automatic stay, a federal protection that takes effect the moment a bankruptcy case is filed, immediately stops creditor calls, collection letters, wage garnishments, and even pending lawsuits. For many, that single moment of quiet is the first peace they have experienced in months or years. The automatic stay under federal bankruptcy law is not just a legal mechanism. For our clients, it functions as an emotional circuit breaker. The harassment stops. The letters stop. And in that silence, people begin to breathe again. Sleep improves. Conversations with loved ones shift from crisis management to future planning. The mental fog that chronic stress creates begins to clear. “I did not realize how much it was affecting me until it was gone.” We hear this from clients again and again. Financial distress becomes so familiar that people forget what life felt like without it. Relief reveals the true depth of the burden. Bankruptcy as a Mental Health Decision We often think of bankruptcy in purely financial terms: debts eliminated, assets protected, a legal process with forms and filings. But for the people who go through it, the most meaningful outcome is often psychological. Filing for bankruptcy removes a chronic stressor from your life. Whether you are considering Chapter 7 to eliminate qualifying debts or Chapter 13 to restructure payments and protect your home, the process is designed to give you a real path forward. It restores a sense of control that debt systematically erodes. When you know your creditors cannot call, that your wages are protected, and that a legal framework is working on your behalf, something fundamental changes. You are no longer reacting to crisis after crisis. You are taking a deliberate step toward stability. That sense of agency, of choosing your future rather than being dragged through it, is one of the most important mental health benefits of bankruptcy. Research from the American Public Health Association has highlighted that financial debt is a meaningful social determinant of health, associated with depression, psychological distress, and reduced access to care. Addressing the debt is not separate from addressing your health. It is part of the same recovery. The Fresh Start Is Real “Fresh start” is a legal term in bankruptcy, but it is also an accurate description of what happens in people’s lives. It means waking up without dread. It means answering the phone without fear. It means having a conversation with your partner about vacation plans instead of how to cover this month’s minimum payments. The fresh start is not just the absence of debt. It is the presence of possibility. Clients who complete their cases often describe a renewed sense of optimism, a willingness to plan for the future that financial distress had taken from them. They reconnect with interests and relationships they had set aside. They rediscover parts of themselves that had gone quiet under the weight of constant worry. At the Law Offices of John M. Hyams, we have seen this transformation thousands of times across our seven Central Pennsylvania offices. It never gets old. Helping someone move from financial crisis to genuine relief is the reason we come to work every day. Resources Beyond Bankruptcy Financial recovery is part of a larger picture. While bankruptcy addresses the legal and structural dimensions of debt, taking care of your overall wellbeing matters just as much. Here are some steps that can complement your fresh start: Financial counseling: The Consumer Financial Protection Bureau offers free tools and resources to help you build financial confidence and measure your progress over time. Support networks: Talking openly with trusted friends, family members, or a support group can break the isolation that financial distress creates. You do not have to carry this alone. Mental health support: If financial stress has contributed to anxiety, depression, or other mental health concerns, speaking with a therapist or counselor can help you process the experience and build healthy coping strategies. Healthy financial habits: After your case is complete, building a simple budget, establishing an emergency fund, and checking your credit report annually through AnnualCreditReport.com can reinforce the stability you have gained. Your Mental Health Matters. Take the First Step Toward Relief. If debt is affecting your sleep, your relationships, your health, or your ability to enjoy your life, you deserve to know your options. Bankruptcy exists for exactly this reason: to give honest people a way to move forward. We offer free consultations in person, online, or by phone. No obligation. No judgment. 717.520.0300 Schedule Your Free Consultation

By John M. Hyams, Bankruptcy Attorney  |  Over 20 Years Exclusively Practicing Bankruptcy Law in Central Pennsylvania Key Takeaway: Earning a good salary does not automatically disqualify you from bankruptcy protection. The law measures your disposable income after expenses, not your gross paycheck. Many professionals and business owners with above-average incomes qualify for debt relief every year. You have spent years building a career. You have worked for promotions, launched a business, or built a practice that earns a solid income. And yet, here you are, searching for answers about bankruptcy. Maybe it was a business that did not survive. Maybe it was a divorce that divided your finances and doubled your expenses. Maybe medical bills piled up in ways no insurance plan could cover. Or maybe the weight of student loans, personal guarantees, and credit card debt simply became impossible to manage, no matter how many hours you worked. Whatever brought you here, there is one belief that may be holding you back: the idea that because you earn a decent living, bankruptcy is simply not available to you. That belief is wrong. And staying trapped by it could cost you years of unnecessary financial pain. The Income Myth: Where It Comes From and Why It Is Wrong One of the most persistent misconceptions about bankruptcy is the belief that you must be broke to qualify. This myth gets reinforced by casual conversation, outdated advice, and even well-meaning financial professionals who do not specialize in bankruptcy law. The misconception intensified after Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) in 2005, which introduced something called the “means test.” News coverage at the time focused heavily on the idea that the new law would make it harder for people with income to file bankruptcy. While BAPCPA did add an income screening step, the resulting headlines vastly oversimplified how the test actually works. Here is the reality: the means test does not simply compare your salary to an arbitrary threshold and issue a pass/fail. It is a two-stage analysis that considers your household size, your actual living expenses, and what you truly have left over after paying for necessities. Earning above the state median income is not the end of the analysis. It is just the beginning. Understanding the Means Test: What It Actually Measures The Pennsylvania bankruptcy means test is the eligibility screening tool for Chapter 7 bankruptcy. It exists to determine whether you have enough disposable income to repay a meaningful portion of your debts. If you do, you may be directed toward Chapter 13 instead. If you do not, Chapter 7 remains available. The test works in two stages: Stage One: The Median Income Comparison First, the test calculates your average monthly income over the six calendar months before you file. This figure is then compared to the median income for a household of your size in Pennsylvania. If your income falls below the median, you automatically pass and can proceed with Chapter 7. For context, the current Pennsylvania median income thresholds (for cases filed on or after November 1, 2025) are approximately $70,378 for a single-person household, $85,290 for a two-person household, $107,327 for a three-person household, and $132,379 for a four-person household, with an additional $11,100 added for each person beyond four. These figures are updated approximately every six months by the U.S. Department of Justice. Stage Two: Calculating Your True Disposable Income If your income exceeds the Pennsylvania median, you move to stage two. This is where the analysis gets more detailed and, for many high earners, more favorable than expected. Stage two allows you to subtract specific categories of expenses from your income to determine your actual disposable income. What remains after these deductions is what the court considers available to pay creditors. If that amount is low enough, you still qualify for Chapter 7. The critical point: the means test was designed to identify people who are abusing the system, not to exclude everyone with a decent paycheck. Many people with above-median incomes have above-median expenses as well, and the law accounts for that. Deductions That Can Change the Outcome The second stage of the means test allows for a range of expense deductions that can significantly reduce your calculated disposable income. These are the categories that most frequently benefit higher earners: Mortgage and secured debt payments. If you carry a substantial mortgage, car loan, or other secured debt, those monthly payments are fully deductible. A larger mortgage often means a significantly lower disposable income on paper. Health insurance and out-of-pocket medical costs. Premiums, co-pays, prescription costs, and ongoing treatment expenses all count. Childcare and dependent care expenses. Daycare, after-school programs, and care for aging dependents can represent significant monthly costs. Required payroll deductions. Federal and state taxes, Social Security, Medicare, mandatory retirement contributions, and union dues. Court-ordered obligations. Child support and alimony payments are fully deductible. IRS-standard living expenses. Food, clothing, housing, utilities, and transportation are deducted using national and local standards set by the IRS. When you add up a large mortgage payment, health insurance premiums, childcare costs, taxes, and standard living expenses, even a six-figure income can result in very little disposable income. That is exactly the situation the means test is designed to evaluate fairly. Chapter 7: When High Earners Still Qualify Chapter 7 bankruptcy offers a relatively quick path to eliminating most unsecured debts, including credit cards, medical bills, personal loans, and certain other obligations. Most Chapter 7 cases are completed within four to six months. High earners may qualify for Chapter 7 when their allowable expense deductions bring their disposable income below the threshold. This happens more often than most people expect, particularly in situations involving: High housing costs relative to income, especially in areas with expensive real estate Significant ongoing medical expenses for a family member Multiple dependents requiring childcare or educational support Recent income changes, such as job loss or reduced hours, that bring the six-month average down There is also an important exception for business debt: if more than 50% of your total debt is business-related rather than personal consumer debt, you are exempt from the means test entirely. This is particularly relevant for business owners whose personal guarantees on commercial loans or lines of credit have created personal liability. Chapter 13: A Powerful Tool Designed for Above-Median Earners If Chapter 7 is not available based on your means test results, Chapter 13 bankruptcy is not a consolation prize. For many higher-income individuals, it is actually the better strategic choice. Chapter 13 allows you to restructure your debts into a manageable three-to-five-year repayment plan, overseen by the bankruptcy court. During this period, you make a single monthly payment to a court-appointed trustee, who distributes funds to your creditors according to the court-approved plan. Here is why Chapter 13 is especially valuable for higher earners: Asset protection. Chapter 13 allows you to keep property that might not be fully protected by exemptions in a Chapter 7 case, including homes with significant equity, investment properties, or valuable business assets. Mortgage arrears recovery. If you have fallen behind on your mortgage, Chapter 13 lets you catch up on missed payments through the repayment plan while keeping your home. The automatic stay. The moment your case is filed, the automatic stay under 11 U.S.C. § 362 immediately stops creditor collection actions, wage garnishments, lawsuits, and foreclosure proceedings. Discharge at completion. At the end of your repayment plan, remaining qualifying unsecured debts are discharged. You complete the plan, and the remaining eligible debt goes away. Why High Earners Find Themselves Needing Bankruptcy Financial crisis does not respect income levels. In fact, higher earners often carry proportionally higher obligations, including larger mortgages, business debts, tax liabilities, and lifestyle commitments that amplify the impact of any financial disruption. The most common triggers we see among higher-income clients include: Divorce and financial restructuring. The division of assets and the cost of maintaining two households can transform a comfortable income into an impossible balancing act. Medical emergencies. High-deductible health plans, extended treatments, and rehabilitation costs can generate six-figure medical debt even for insured individuals. Business failure and personal guarantees. Business owners who signed personal guarantees on commercial leases, loans, or lines of credit can face devastating personal liability when the business fails. Economic disruption. Industry downturns, layoffs, and contract cancellations can eliminate income overnight while obligations remain. In every one of these situations, the person did not fail. The circumstances changed. And the law provides a path forward. Do Not Assume You Do Not Qualify The biggest mistake high-income earners make is assuming bankruptcy is not an option before ever consulting with an attorney who can actually run the numbers. At the Law Offices of John M. Hyams, we have spent over 20 years helping Central Pennsylvania residents navigate these decisions with confidence. Our consultations are free, confidential, and available in person, online, or by phone. Call 717.520.0300 Schedule Your Free Means Test Analysis →

A practical breakdown of how Chapter 13 plans are structured, what goes into each payment, and what Pennsylvania homeowners can realistically expect. By John M. Hyams, Bankruptcy Attorney  |  Published March 2026  |  Law Offices of John M. Hyams The Question Every Homeowner Facing Foreclosure Asks If you are behind on your mortgage and considering Chapter 13 bankruptcy, there is one question that probably keeps you up at night: “How much will I actually pay each month?” It is a fair question, and an important one. Committing to a three-to-five-year repayment plan is a significant financial decision. You deserve to understand exactly what that commitment involves before you make it. The good news? Chapter 13 payment plans are not mysterious. They follow a clear structure based on your income, your debts, and what the court considers reasonable living expenses. And in many cases, the monthly Chapter 13 payment is actually lower than what you are currently paying across all your debts combined. Let us walk through how a Chapter 13 plan is built, piece by piece. The Building Blocks of a Chapter 13 Payment Every Chapter 13 repayment plan is built from several components. Understanding each one helps you see how your monthly payment comes together. Mortgage Arrears (Catching Up on What You Owe) If you have fallen behind on your mortgage, those missed payments, often called “arrears,” get spread out across the life of your plan. Instead of needing to come up with a lump sum to cure the default, Chapter 13 lets you repay that amount in manageable monthly installments over three to five years. Ongoing Mortgage Payments Your regular monthly mortgage payment continues as usual. This is paid directly to your mortgage company, separate from the plan payment to the trustee. The plan addresses the arrears; you remain responsible for keeping current going forward. Priority Debts Certain debts must be paid in full through your plan. These include back taxes owed to the IRS or Pennsylvania, domestic support obligations like child support or alimony, and other debts that federal law treats as priorities. According to the U.S. Courts, priority claims receive special status under bankruptcy law and are addressed before other unsecured debts. Other Secured Debt Arrears If you are behind on a car loan or other secured debt, those arrears can also be included in the plan. This allows you to catch up on the car note while continuing your regular monthly vehicle payment, protecting you from repossession. Unsecured Debt Portion Credit cards, medical bills, and personal loans fall into the unsecured category. In most Chapter 13 plans, unsecured creditors receive whatever is left over after priority and secured debts are addressed. Depending on your disposable income, unsecured creditors may receive only a fraction of what you owe. The Consumer Financial Protection Bureau explains that remaining unsecured balances are typically discharged upon plan completion. Trustee Fees A court-appointed trustee administers your plan, collecting your monthly payment and distributing funds to creditors. The trustee charges a fee for this service, generally ranging from about 3% to 10% of the amount distributed, depending on your judicial district. In the Middle District of Pennsylvania, this fee is factored into your plan from the start, so there are no surprises. Attorney Fees In most Chapter 13 cases, the majority of your attorney fees are paid through the plan itself. This means you do not need to come up with thousands of dollars upfront before filing. A small portion is typically due at filing, with the balance spread across your plan payments. How Your Payment Is Calculated Your Chapter 13 monthly payment is not an arbitrary number. It is determined by a careful analysis of three key factors. Disposable Income The court looks at your average monthly income over the six months before filing and subtracts reasonable living expenses. What remains is your “disposable income,” and this figure is central to your plan. The Cornell Law Institute notes that the debtor’s income, rather than assets, forms the basis of Chapter 13 repayment. Plan Length: Three Years or Five? If your income falls below the Pennsylvania median for your household size, your plan can be as short as three years. If your income is above the state median, the plan will typically run for five years. You can use our Bankruptcy Calculator to get an initial sense of where you stand. The Priority of Your Debts Your payment must satisfy debts in a specific order: priority debts like taxes and support obligations come first, followed by secured arrears, and finally unsecured debts. This structure ensures that the most critical obligations are covered. What Chapter 13 Payments Might Look Like: Three Examples Important: The following scenarios are general illustrations only. They are not guarantees of any specific outcome. Every case is unique, and actual plan payments depend on your specific financial circumstances. Scenario A: Behind on the Mortgage, Moderate Unsecured Debt A Central Pennsylvania homeowner has $12,000 in mortgage arrears and $25,000 in unsecured debt (credit cards and medical bills). They earn above the state median, so the plan runs for five years. Monthly disposable income after expenses: $650. Component Monthly Amount Notes Mortgage arrears ($12,000 ÷ 60 months) $200 Spread over 5 years Priority debts (back taxes: $3,000) $50 Must be paid in full Attorney fees (paid through plan) $50 Balance after retainer Trustee fee (approx. 7%) $45 Based on total distributions Remainder to unsecured creditors $305 Partial payment likely Estimated total plan payment $650 Plus ongoing mortgage In this scenario, the homeowner stops the foreclosure, catches up over five years, and the unsecured creditors receive a portion of what is owed. Any remaining unsecured balance is discharged at plan completion. Scenario B: Car Loan Behind, Home Current A family is current on the mortgage but three months behind on a car loan ($2,400 in arrears) and has $15,000 in unsecured debt. Their income is below the state median, qualifying for a three-year plan. Disposable income: $500. Component Monthly Amount Notes Car loan arrears ($2,400 ÷ 36 months) $67 Spread over 3 years Priority debts (none) $0 No tax or support debts Attorney fees (paid through plan) $65 Balance after retainer Trustee fee (approx. 7%) $35 Based on total distributions Remainder to unsecured creditors $333 Partial payment likely Estimated total plan payment $500 Plus ongoing car & mortgage This family keeps the car, stays in the home, and eliminates a significant portion of unsecured debt over three years. Scenario C: Mixed Secured and Unsecured with Tax Debt A homeowner has $8,000 in mortgage arrears, $1,800 in car loan arrears, $5,000 in back taxes, and $40,000 in unsecured debt. Income is above the median. Disposable income: $800. Component Monthly Amount Notes Mortgage arrears ($8,000 ÷ 60 months) $133 Spread over 5 years Car loan arrears ($1,800 ÷ 60 months) $30 Spread over 5 years Priority tax debt ($5,000 ÷ 60 months) $83 Must be paid in full Attorney fees (paid through plan) $50 Balance after retainer Trustee fee (approx. 7%) $55 Based on total distributions Remainder to unsecured creditors $449 Small percentage of total Estimated total plan payment $800 Plus ongoing mortgage & car Even with multiple types of debt, the plan creates a single, predictable monthly payment that addresses everything simultaneously. What Happens to Unsecured Creditors One of the most significant benefits of Chapter 13 for people carrying large unsecured balances is that these creditors often receive only a portion of what is owed. The exact percentage depends on how much disposable income remains after mandatory debts are covered. In many Pennsylvania cases, unsecured creditors receive anywhere from a few cents on the dollar to a moderate percentage of the total balance. When you complete all plan payments on time, the remaining unpaid unsecured debt is discharged. That means it is legally eliminated. This is one of the most powerful aspects of Chapter 13: you protect your home and car while significantly reducing the total debt burden by the time your plan is complete. How Plan Payments Work in Practice Once the court confirms your plan, you make a single monthly payment to the Chapter 13 trustee. The trustee then distributes those funds to your creditors according to the plan terms. You do not need to manage multiple payments to different creditors. Payments can typically be made through wage orders (automatic payroll deductions), electronic transfers, or direct payments to the trustee. Many people find that payroll deductions are the simplest approach because the payment happens automatically. Timing matters: You will need to begin making plan payments within about 30 days of filing, even before the court formally confirms the plan. Your attorney will prepare you for this timeline so there are no surprises. What If You Cannot Make a Payment? Life does not always go according to plan, and the Chapter 13 system has built-in flexibility for that reality. If you experience a financial setback, such as a job loss, medical emergency, or unexpected expense, the most important step is to communicate with your attorney immediately. In many cases, the court can modify your plan to accommodate changed circumstances. Your payment amount, plan length, or the percentage paid to unsecured creditors may all be adjusted. Defaulting on plan payments without seeking modification can result in case dismissal, which could reopen the door to foreclosure or repossession. But with proactive communication, most temporary setbacks can be managed within the Chapter 13 framework. Every Situation Is Unique. Get Your Personalized Payment Estimate. The scenarios above offer a general picture, but your plan payment will depend entirely on your specific income, expenses, and debts. Attorney John M. Hyams has spent over 20 years exclusively practicing bankruptcy law in Central Pennsylvania, with seven convenient office locations and recognition as Simply the Best by Harrisburg Magazine (2020, 2024, 2025). Your free consultation is available in person, online, or by phone. Get Your Payment Estimate Call 717.520.0300 20+ YearsBankruptcy Experience 7Central PA Locations FreeConsultations

Seeing your mortgage statement with a past-due balance can feel overwhelming. Maybe you lost income unexpectedly, or a costly life event put you behind. Whatever brought you here, one thing is certain: you have more options than you might think. Every year, thousands of Pennsylvania homeowners fall behind on their mortgages. You are not alone, and falling behind does not mean losing your home is inevitable. The key is understanding your choices and acting before the situation escalates. Several paths can help you get back on track, and each works best in different circumstances. This guide walks through five options available to homeowners in Central Pennsylvania who are behind on mortgage payments. Some involve working directly with your lender, while others provide legal protections that give you greater certainty. The right choice depends on your specific financial situation, how far behind you are, and your long-term goals for keeping your home. Option 1: Loan Modification A loan modification permanently changes one or more terms of your existing mortgage to make payments more affordable. This might include lowering your interest rate, extending the length of your loan, or rolling your missed payments into the remaining balance. The goal is to reduce your monthly payment to a level you can sustain. To pursue a loan modification, you will typically need to submit a hardship application to your mortgage servicer, including proof of income, expenses, and a letter explaining why you fell behind. The Consumer Financial Protection Bureau recommends contacting your servicer at the first sign of trouble, as early communication gives you the best chance of approval. Loan modifications can be effective when your financial hardship is ongoing. For example, if you went through a divorce that reduced your household income or changed careers and now earn less, a modification can reset your mortgage to reflect your new reality. Limitations to keep in mind: Loan modifications are entirely at your lender’s discretion. There is no legal requirement for them to approve your request. The process can be slow, often taking several months, and during that time your foreclosure timeline may continue to run. If your lender denies the modification, you may find yourself further behind with fewer options remaining. Option 2: Forbearance Agreement A forbearance agreement provides temporary relief by allowing you to reduce or pause your mortgage payments for a set period. This is designed for situations where your financial difficulty is short-term. For example, if you are recovering from a medical procedure, waiting for a new job to start, or dealing with a temporary gap in income, forbearance can give you breathing room. The U.S. Department of Housing and Urban Development (HUD) recommends that homeowners who are struggling with payments reach out to a HUD-approved housing counselor for free guidance on forbearance and other options. These counselors can help you understand the terms being offered and negotiate on your behalf. Important: Forbearance does not erase your missed payments. When the forbearance period ends, you will need to repay the paused amounts. Depending on the arrangement, this might mean a lump sum, a repayment plan spread over several months, or adding the amount to the end of your loan. If you cannot manage the repayment terms, you could end up in a worse position than before. Forbearance works best when your hardship is truly temporary and you are confident your income will recover. Option 3: Repayment Plan With Your Lender If you are only a few months behind, your lender may agree to a repayment plan that lets you gradually catch up on missed payments. Under this arrangement, you pay your regular monthly mortgage amount plus an additional portion of the overdue balance each month until you are current. Repayment plans work best when your income has stabilized after a temporary disruption. If you experienced a brief job loss, an unexpected expense, or a gap between paychecks and are now back on solid footing, a repayment plan can be a straightforward way to resolve the arrears without modifying your loan terms. What to consider: Like loan modifications, repayment plans are voluntary on the lender’s part. Your servicer may or may not agree to the terms you need. If the additional payment amount is too high for your current budget, you could fall behind again, potentially triggering foreclosure proceedings. The further behind you are, the larger the catch-up amount becomes, making this option less practical for homeowners who are many months in arrears. Option 4: Short Sale If keeping your home is no longer realistic, a short sale allows you to sell the property for less than what you owe on the mortgage, with your lender’s approval. This can be a way to avoid the full foreclosure process and its consequences. A short sale generally causes less damage to your credit than a completed foreclosure, and it may allow you to transition to more affordable housing on your own terms rather than under the pressure of a court-ordered sale. Key considerations: In some cases, the lender may pursue you for the difference between the sale price and the remaining loan balance, known as a deficiency. Pennsylvania law has specific rules governing deficiency judgments, and it is important to understand these before proceeding. A short sale also requires your lender’s agreement, and the process can take months of negotiation. If your goal is to keep your home, a short sale is not the right path. However, if you have decided to move on, it can provide a more controlled exit. Option 5: Chapter 13 Bankruptcy For homeowners who want to keep their home and have a steady income, Chapter 13 bankruptcy offers something that none of the other options on this list can provide: legal certainty. The moment you file a Chapter 13 case, the court issues an automatic stay, a legally enforceable order that immediately stops all foreclosure activity. Unlike the other options discussed above, the automatic stay does not depend on your lender’s willingness to cooperate. It is a federal legal protection that applies automatically as soon as your case is filed. According to the United States Courts, the automatic stay halts foreclosure proceedings and gives the homeowner the opportunity to bring past-due payments current over a reasonable period of time. Under a Chapter 13 plan, you propose a structured schedule to repay your mortgage arrears over three to five years, while continuing to make your regular monthly mortgage payments going forward. Once the court approves your plan, your lender is bound by its terms. This means no more uncertainty about whether your lender will agree to help, no more waiting months for a decision, and no more risk that the process stalls while your foreclosure clock keeps ticking. Chapter 13 also provides additional benefits that can make your overall financial picture more manageable. If you have other debts like credit cards, medical bills, or personal loans, these can be included in your repayment plan, often at reduced amounts. And if your home has lost value, you may be able to remove certain junior liens through a process known as lien stripping. Why certainty matters: When you are behind on your mortgage, you need to know that the solution you choose will actually work. With loan modifications, forbearance, and repayment plans, you are always negotiating, and the lender always has the final say. Chapter 13 shifts that dynamic. Once the bankruptcy court confirms your plan, both you and your lender follow the same rules. For many Central Pennsylvania homeowners, that peace of mind is the most valuable part of the process. Comparing Your Options Each of these five options has a role to play, but they differ in important ways. Here is how they compare across several key factors: Option Keeps Your Home? Legal Protection? Lender Must Agree? Timeline Loan Modification Yes No Yes 2-6 months Forbearance Temporary No Yes 3-12 months Repayment Plan Yes No Yes 3-12 months Short Sale No No Yes 3-6 months Chapter 13 Yes Yes (Automatic Stay) No (Court-ordered) 3-5 year plan If your goal is to stay in your home and you want a solution that does not depend on your lender’s good faith, Chapter 13 offers the strongest legal framework. However, if your hardship is temporary and your lender is cooperative, a forbearance or repayment plan may resolve the situation without the complexity of a bankruptcy filing. The right choice also depends on how far behind you are. If you have missed one or two payments, a repayment plan might be sufficient. If you are several months or more behind and your lender has begun foreclosure proceedings, the legal protection of Chapter 13 becomes far more valuable. Credit impact varies as well. All of these options can affect your credit to some degree, but a completed foreclosure typically causes the most severe and longest-lasting damage. Proactively addressing the situation through any of these paths is generally better for your long-term financial health than allowing the foreclosure to proceed. Understanding Your Options Is the First Step Falling behind on your mortgage does not have to mean losing your home. As you can see, there are multiple paths forward, and the best one for you depends on your income, how far behind you are, and whether your financial situation has stabilized or is still changing. If you are a homeowner in Central Pennsylvania facing mortgage difficulties, the Law Offices of John M. Hyams can help you understand which option fits your situation. With over 20 years of exclusive focus on bankruptcy law, John Hyams has helped clients from all walks of life protect their homes and find a path to financial stability. The firm offers free consultations in person, online, or by phone at any of seven convenient Central Pennsylvania locations. You can also use the firm’s Bankruptcy Calculator to get a preliminary sense of your options, or visit the Chapter 13 Bankruptcy guide for a deeper understanding of how Chapter 13 can protect your home. Explore Your Options

20+Years Exclusive Practice 7Central PA Locations FreeConsultations 3xSimply the Best Award Opening your mail to find a sheriff sale notice ranks among the most frightening moments a homeowner can face. Your mind races: How much time do I have? Will my family lose our home? Is there anything I can do? The answer, for many Central Pennsylvania homeowners, is yes. Chapter 13 bankruptcy provides a legal mechanism to stop a sheriff sale and create a structured plan to save your home. Even if the sale date is approaching quickly, filing a Chapter 13 petition triggers what is called an automatic stay, which immediately halts the foreclosure process. This is not a loophole or a trick. It is a fundamental protection written into federal bankruptcy law (11 U.S.C. § 362). Below, we walk through the complete timeline so you can understand exactly how this process works and when you need to act. Understanding the Foreclosure Timeline in Pennsylvania Before we discuss how Chapter 13 stops the process, it helps to understand how foreclosure works in Pennsylvania. The state follows a judicial foreclosure process, meaning your lender must go through the court system before your home can be sold. Here is a general overview of the typical foreclosure timeline: Missed payments (months 1 through 3): Your mortgage servicer will contact you about missed payments and late fees. After about 90 days of delinquency, they must send required pre-foreclosure notices. Act 91 and Act 6 Notices: Pennsylvania law requires your lender to send specific notices before filing a foreclosure complaint. The Act 91 notice informs you of the Homeowners’ Emergency Mortgage Assistance Program (HEMAP) and provides information about housing counseling services. You have 33 days from the mailing date to meet with an approved counselor. During this time, your lender cannot begin legal action. Foreclosure complaint filed (after 120+ days of delinquency): Once the required notice periods expire, your lender files a Complaint in Mortgage Foreclosure in your county’s Court of Common Pleas. You are served with this complaint and have 20 days to respond. Court judgment and writ of execution: If the court rules in the lender’s favor, a writ of execution is issued directing the county sheriff to schedule and advertise the sale. Sheriff sale notice: You will receive at least 30 days’ notice before the sheriff sale date. The sale is also advertised in local newspapers for three consecutive weeks before it takes place. Key takeaway: This timeline creates a window of opportunity. Even after a sheriff sale has been scheduled, you still have legal options. Pennsylvania law allows you to reinstate your mortgage up to one hour before the bidding begins. And Chapter 13 offers an even more powerful tool. The Automatic Stay: Your Immediate Legal Shield The moment a Chapter 13 bankruptcy petition is filed with the court, a federal protection called the automatic stay goes into effect. The automatic stay is one of the most powerful protections available to homeowners in financial distress. According to the United States Courts, the automatic stay immediately stops the foreclosure proceeding as soon as you file. This means: The sheriff sale cannot proceed. Even if the sale is scheduled for tomorrow, filing today stops it. Your lender’s attorney must receive notice of the bankruptcy filing, and the sale is canceled or postponed. All creditor collection actions are halted. Phone calls, letters, lawsuits, and wage garnishments all stop. This protection extends to all of your creditors, not just your mortgage lender. Your lender is legally prohibited from continuing the foreclosure. Violating the automatic stay can result in penalties for the creditor. This is a court order with real enforcement power. The automatic stay remains in effect for the duration of your Chapter 13 case, which typically lasts three to five years. This gives you the breathing room you need to propose and complete a repayment plan to bring your mortgage current. Important: The automatic stay only works if you file before the sheriff sale takes place. Once the property has been sold at auction, the opportunity to use Chapter 13 to save your home is gone. That is why acting quickly is so important. Step-by-Step: What Happens After You File Chapter 13 Understanding the timeline after filing helps reduce uncertainty and gives you a clear picture of what to expect. Day 1: Emergency Consultation When you contact a bankruptcy attorney, you will discuss your financial situation, your mortgage arrears, and your ability to make future payments. A skilled attorney can evaluate whether Chapter 13 is the right solution and, if a sheriff sale is imminent, can prepare an emergency filing. At the Law Offices of John M. Hyams, we offer free consultations by phone, online, or in person at any of our seven Central Pennsylvania offices. Days 1 Through 7: Document Gathering and Case Preparation Your attorney will work with you to gather the financial documents needed for your petition. These include pay stubs, tax returns, mortgage statements, a list of all debts, and a detailed accounting of your monthly income and expenses. When time is short, experienced attorneys know how to prioritize and file on an emergency basis to get the automatic stay in place as quickly as possible. Filing Day: The Automatic Stay Takes Effect Immediately The instant your petition is filed with the bankruptcy court, the automatic stay is in effect. Your attorney notifies the sheriff’s office and the lender’s attorney that the case has been filed. The sheriff sale is stopped. This is the critical moment that protects your home. Within 14 Days of Filing: Your Repayment Plan Is Filed You must file your proposed Chapter 13 repayment plan with the court within 14 days of your petition (or it may be filed simultaneously with the petition). This plan outlines how you will cure your mortgage arrears over a period of three to five years while also making your regular monthly mortgage payments going forward. 30 to 60 Days After Filing: The 341 Meeting of Creditors You will attend a meeting (known as the 341 meeting) where the Chapter 13 trustee and your creditors can ask questions about your financial situation and your proposed plan. This meeting is typically straightforward, especially when you have prepared thoroughly with your attorney. Plan Confirmation Hearing The bankruptcy court will hold a hearing to review and confirm your repayment plan. Once confirmed, the plan becomes binding on all parties. Your trustee will distribute payments to your creditors according to the plan’s terms. Regular Payments Begin You begin making your plan payments to the Chapter 13 trustee, who distributes the funds to your creditors. You also continue making your regular, current mortgage payments directly to your lender. Staying current on both sets of payments is essential to keeping the protection of the automatic stay in place. How Your Mortgage Arrears Are Cured Through Chapter 13 One of the most valuable features of Chapter 13 for homeowners facing foreclosure is the ability to spread your past-due mortgage payments over the life of your repayment plan. Here is how it works in practice: The total arrears are calculated. Your attorney and the trustee determine the total amount you owe in missed mortgage payments, late fees, and any lender attorney fees incurred during the foreclosure process. Arrears are spread over three to five years. Instead of needing to come up with the full past-due amount all at once, your Chapter 13 plan allows you to repay these arrears in manageable monthly installments over the plan period. Regular mortgage payments resume immediately. While you are curing the arrears through the plan, you continue making your normal monthly mortgage payments directly to your lender. This keeps your mortgage current going forward. The trustee distributes arrears payments. Your monthly plan payment to the trustee includes the arrears portion, which the trustee forwards to your mortgage lender on a regular schedule. When you successfully complete your Chapter 13 plan, your mortgage arrears are fully cured. You emerge from bankruptcy current on your mortgage and in full standing as the owner of your home. What Happens After Your Plan Is Confirmed Once the bankruptcy court confirms your repayment plan, your job is to follow through. This means making every plan payment on time and keeping your regular mortgage payments current. During the three-to-five-year plan period, you are protected by the automatic stay. Your lender cannot resume foreclosure proceedings as long as you are meeting your obligations under the plan. When you complete all payments under the plan, you receive a discharge from the bankruptcy court. This marks the official end of your bankruptcy case. Your mortgage arrears have been fully repaid, qualifying unsecured debts have been eliminated or resolved, and you retain full ownership of your home. For many families, this is the fresh start they have been working toward. Can They Still Take My House After Filing? Transparency matters, so it is important to address this question honestly. While Chapter 13 provides powerful protection, it is not unconditional. Your lender can ask the court to lift the automatic stay if you fail to make your plan payments or your regular mortgage payments after filing. If the court grants this request, the foreclosure process can resume. This is why two things are essential: Make every payment on time. Your plan payments and your ongoing mortgage payments must be made consistently. If you experience a temporary difficulty, communicate with your attorney right away. There are often options to modify your plan. Work closely with an experienced bankruptcy attorney. An attorney who focuses exclusively on bankruptcy law understands how to structure a realistic plan, respond to creditor objections, and protect your interests throughout the process. With over 20 years devoted exclusively to bankruptcy practice, Attorney John M. Hyams has guided thousands of Central Pennsylvania families through Chapter 13 cases. Time Is Critical: Get Emergency Foreclosure Help Now If you have received a sheriff sale notice, or if you are behind on your mortgage and worried about foreclosure, the single most important thing you can do is act now. The earlier you consult with a bankruptcy attorney, the more options you have. Call Now: 717.520.0300 Or schedule a free consultation online Available in person, by phone, or online at our Harrisburg, Mechanicsburg, Hershey, York, Lancaster, East Petersburg, and Lititz offices. Simply the Best – Harrisburg Magazine 2020, 2024, 2025

When your spouse mentions the word “bankruptcy,” one of the first thoughts that races through your mind is probably: What happens to our home? That fear is completely understandable. Your home represents more than a financial asset. It is where your children sleep. It is where your family gathers. It is the foundation of your daily life. The thought of losing it to a legal process you did not initiate can be deeply unsettling. Here is the reassuring truth: in many cases, when only one spouse files for bankruptcy in Pennsylvania, the family home is protected. Understanding how that protection works can help replace fear with confidence and allow you to plan ahead for your family’s financial future. How Joint Homeownership Works When One Spouse Files One of the most important things to understand is that bankruptcy affects the person who files, not everyone connected to them. When only your spouse files for bankruptcy, only your spouse’s financial obligations and interests become part of the bankruptcy case. In Pennsylvania, married couples who purchase a home together typically hold the property as “tenants by the entirety.” This is a special form of ownership recognized under Pennsylvania law that treats both spouses as owning 100% of the property together, rather than each owning a separate 50% share. The American Bankruptcy Institute explains that this form of ownership can provide significant protection when only one spouse files for bankruptcy. Because each spouse owns the entire property under tenancy by the entirety, creditors who are owed money by only one spouse generally cannot force the sale of the home. This protection is one of the most powerful tools available to married couples navigating bankruptcy in Pennsylvania. Important exception: If you and your spouse share joint debts (such as a mortgage, credit cards you both signed for, or other loans you co-signed), creditors on those joint debts may still have claims against the property. The tenancy by the entirety protection only shields the home from debts that belong to one spouse alone. Understanding Exemptions That Protect Your Home Even when tenancy by the entirety does not fully apply, bankruptcy law provides additional layers of protection through what are called “exemptions.” Exemptions allow the person filing for bankruptcy to protect certain property up to a specific dollar value. Pennsylvania is unique because it does not offer a state-level homestead exemption. Instead, bankruptcy filers in Pennsylvania can choose to use the federal exemption system, which includes a federal homestead exemption that currently protects up to $31,575 in home equity for an individual filer (as of April 2025). For married couples filing jointly, that amount doubles to $63,150. Equity is the difference between what your home is worth and what you owe on the mortgage. For example, if your home is valued at $250,000 and you owe $230,000 on the mortgage, your total equity is $20,000. In this scenario, the federal homestead exemption would fully protect that equity. When only one spouse files, the analysis focuses on the filing spouse’s interest in the home. Because exemption amounts and eligibility rules can change, it is important to verify current exemption amounts with an experienced bankruptcy attorney before making any decisions. When Your Spouse Files Chapter 7 Chapter 7 bankruptcy is designed to eliminate most unsecured debts (like credit card balances, medical bills, and personal loans) relatively quickly, with most cases concluding within a few months of filing. When your spouse files Chapter 7, the bankruptcy trustee reviews the filing spouse’s assets. For the family home, the key question is whether the filing spouse’s equity in the property is protected by an available exemption. If your home is held as tenants by the entirety and your spouse’s debts are individual (not joint), the property may be entirely outside the reach of the bankruptcy estate. Even if some debts are joint, the federal homestead exemption can protect a significant portion of the filing spouse’s equity. In most cases involving families with a mortgage and moderate equity, the home is well protected. Your ownership interest is not diminished because your spouse filed. You continue to own the property, and your rights remain fully intact. When Your Spouse Files Chapter 13 Chapter 13 bankruptcy works differently. Rather than eliminating debts through liquidation, Chapter 13 allows the filing spouse to create a structured repayment plan lasting three to five years. One of the greatest advantages of Chapter 13 is its ability to help families catch up on missed mortgage payments and prevent foreclosure. If your spouse has fallen behind on the mortgage, Chapter 13 can cure those arrears over the life of the repayment plan while keeping regular monthly payments current going forward. This means the home stays in your family, and the threat of foreclosure is replaced by a clear, court-approved path to getting caught up. During the Chapter 13 plan, the “automatic stay” prevents creditors from taking any collection action, including foreclosure proceedings. This legal protection goes into effect the moment the bankruptcy petition is filed. What the Non-Filing Spouse Should Know If your spouse files for bankruptcy and you do not, there are a few things to keep in mind regarding your own financial responsibilities. First, your spouse’s bankruptcy does not eliminate your responsibility for joint debts. The Consumer Financial Protection Bureau explains that creditors can still pursue collection from any borrower whose name appears on a loan, regardless of what happens in a divorce decree or bankruptcy case. If both you and your spouse signed the mortgage, you remain obligated to make those payments. Second, your own credit report may be affected if joint accounts are included in your spouse’s bankruptcy filing. Creditors may report the account differently on your credit history, even though you did not file. Third, the mortgage does not pause or disappear during your spouse’s bankruptcy. Payments must continue to be made on time to keep the home. Communication between you and your spouse about household finances is essential during this period. Planning Together for the Best Outcome When one spouse is considering bankruptcy, the decision affects the entire household. Open communication is one of the most valuable tools you have as a family. In some situations, it may make sense for only one spouse to file. In others, a joint filing might provide greater overall protection. The right choice depends on who owes the debts, how your property is titled, and what your family’s financial goals are. A qualified bankruptcy attorney can analyze your specific circumstances and help you determine the best strategy. If divorce is also part of the picture, the timing of bankruptcy relative to the divorce matters. Whether bankruptcy should come before, during, or after divorce proceedings depends on factors such as joint debt obligations, property division, and each spouse’s individual financial situation. You can learn more about how these two processes interact on our Divorce and Bankruptcy in Pennsylvania guide. Whatever path you choose, know that you are not alone in this. Thousands of Pennsylvania families navigate these decisions every year, and the law provides real, meaningful protections for your home and your family’s stability. Get Answers for Your Situation If your spouse is considering bankruptcy and you are worried about your family’s home, the most important step you can take right now is getting clear, reliable answers that apply to your specific situation. Attorney John M. Hyams has spent over 20 years helping Central Pennsylvania families protect their homes and find a path forward through financial difficulty. With seven convenient office locations across the region, a free consultation is within easy reach. Call 717.520.0300 Or schedule your free consultation online • In-person, phone, or video 20+ Years ExperienceSimply the Best 2020, 2024, 20257 Central PA LocationsFree Consultations