Bankruptcy in Allentown, PA

Drowning in debt? Getting constant calls from creditors? You’re not the only one.

For many Allentown residents, financial stress builds until it becomes impossible to ignore. Whether you’re behind on bills, facing foreclosure, or simply can’t get ahead, it may be time to consider your legal options. Bankruptcy isn’t about failure—it’s about finding a path back to stability.

If you live in Allentown, help is close by. Local attorneys who focus on bankruptcy can guide you through the process, explain your options clearly, and help you protect what matters most. 

Types of Bankruptcy in Allentown, Pennsylvania

Bankruptcy is a legal tool that gives individuals and businesses in Pennsylvania a way to break free from overwhelming debt. If you’re unable to keep up with your financial obligations, filing for bankruptcy can help you discharge or restructure what you owe.

Pennsylvania residents have several options under the U.S. Bankruptcy Code, including Chapter 7, Chapter 11, and Chapter 13. Chapter 7 is designed for those with limited income and few assets—it allows for the discharge of unsecured debt through the liquidation of non-exempt property. Chapter 13 is best suited for people with regular income who want to reorganize their debts and catch up over time. Chapter 11 is typically used by businesses or individuals with complex financial situations who need to restructure significant debts.

If you live in Allentown, your bankruptcy case will be handled by the U.S. Bankruptcy Court for the Eastern District of Pennsylvania. Local hearings are typically held at the Edward N. Cahn U.S. Courthouse, located at 504 W. Hamilton Street, Allentown, PA 18101.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy gives individuals in Pennsylvania a chance to wipe out unsecured debt and start over with a clean slate. If you’re overwhelmed by credit card balances, medical bills, or personal loans, this may be the most direct path to relief. But before filing, it’s important to understand how the process works and whether you meet the requirements.

Eligibility for Chapter 7 starts with the means test, which compares your income to Pennsylvania’s median for a household your size. If your income falls below the threshold, you likely qualify. If it’s higher, further analysis of your expenses and financial obligations may still make filing possible. The income limits in 2024 were:

• 1-person household: $65,737
• 2-person household: $80,864
• 3-person household: $100,881
• 4-person household: $122,151

Add-on amounts apply for households larger than four.

Filing under Chapter 7 triggers an automatic stay, which temporarily stops most collection actions—including wage garnishments, foreclosure attempts, and creditor lawsuits. 

Chapter 11 Bankruptcy

Chapter 11 bankruptcy gives businesses—and in some cases, high-income individuals in Pennsylvania—a chance to reorganize their finances without shutting down operations or giving up critical assets. Unlike Chapter 7, which centers on liquidation, Chapter 11 focuses on restructuring debts while allowing the debtor to remain in control of day-to-day operations. This approach is often used by companies looking to stay open, preserve jobs, and gradually work toward financial recovery.

A key part of the process is the reorganization plan, which outlines how existing debts will be managed. This could involve adjusting payment terms, reducing what’s owed, or selling off non-essential assets. Creditors review and vote on the proposal, and the court must approve the plan to ensure it’s fair, feasible, and compliant with bankruptcy law. While Chapter 11 takes time and detailed planning, it can offer a powerful alternative to liquidation, giving debtors the chance to restructure and move forward with a more sustainable financial strategy.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is designed for Pennsylvania residents who earn a steady income but need more time and structure to manage their debts. Often called a wage earner’s plan, it allows you to reorganize what you owe into a manageable payment schedule without giving up your property. Once you file, the court appoints a trustee who reviews your income, expenses, and debts to determine if your proposed repayment plan is realistic and compliant with the law.

The repayment period typically lasts three to five years, depending on how your income compares to Pennsylvania’s median. If you fall below the threshold, you may qualify for a shorter plan. If your income is higher, the court will likely require a five-year commitment. Chapter 13 can be especially helpful if you’re trying to avoid foreclosure or keep a vehicle that’s at risk of repossession. 

During the repayment term, you’ll make monthly payments to the trustee, who distributes those funds to your creditors. Some debts may be discharged at the end of your plan, but others—like child support, alimony, and certain tax obligations—remain enforceable. A bankruptcy attorney can help you build a plan that protects your assets while putting you on track toward long-term financial recovery.

The Bankruptcy Process in Allentown, Pennsylvania

Choosing to file for bankruptcy isn’t easy, but if paying off your debts in the next five years feels out of reach, it may be time to consider your legal options. Bankruptcy exists to help individuals regain control of their finances when bills, interest, and collection pressure become too much to manage. In Pennsylvania, the process offers a court-supervised path to either eliminate debt or restructure it into something more realistic.

Filing starts with preparation. You’ll need to gather complete and accurate financial records, including income, monthly expenses, outstanding debts, and a list of all assets. Incomplete or inaccurate paperwork can cause serious delays or even get your case dismissed. Pennsylvania also requires you to complete a credit counseling course from an approved provider within 180 days of filing. An experienced bankruptcy attorney can help you ensure everything is in order and that your filing meets all legal requirements.

One of the most important parts of bankruptcy is protecting your property. Pennsylvania gives filers the option to use either state exemptions or federal exemptions, but you can’t use both. Choosing the right exemption scheme can help you safeguard your home, car, and other essentials as you go through the process.

Here’s a breakdown of the key options available:

Pennsylvania State Exemptions:

• Wildcard Exemption: $300 that can be applied to any property
• Personal Property: Full protection for clothing, schoolbooks, and Bibles
• Wages: 75% of earned but unpaid wages are exempt
• Pensions/Retirement: Exemptions apply to certain qualified retirement accounts

Federal Exemptions (as of April 1, 2025):

• Homestead: Up to $31,575 in home equity, or $63,150 for joint filers
• Motor Vehicle: Up to $5,025 in vehicle equity
• Wildcard: $1,675, plus up to $15,800 of unused homestead exemption—for a total of $17,475 that can be used for any property
• Personal Property: Specific exemptions for household goods, tools of the trade, and jewelry, each with their limits

Work With an Experienced Allentown, Pennsylvania Lawyer

If you’re an Allentown resident facing overwhelming debt, bankruptcy may be the right step toward a clean financial slate. Whether you’re exploring Chapter 7 to eliminate unsecured debt or Chapter 13 to restructure what you owe, the law is there to help you rebuild, not punish you. With experienced legal support, you can protect important assets, stop collection calls, and take meaningful steps toward financial recovery.

Submit a request online or call us today at (866) 345-6784 to speak with an experienced lawyer in your area!

About the Author

Aaron is a professional legal writer with a B.S. in English Education from Southern Illinois University – Carbondale. He has written, published, and edited thousands of legal articles for RequestLegalHelp, which has connected over 5 million people to legal help in the United States.

With over five years of experience writing thousands of legal articles for law firms across the U.S. and Canada, Aaron specializes in covering federal, state, and city-level legal issues ranging from auto accidents to wrongful terminations.