Legislation would update exemption statute for small businesses

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Legislation soon to be introduced in the state Senate would modernize the state’s exemption statute to protect small businesses and encourage entrepreneurship.

Many entrepreneurs open businesses in states where they will not lose their homes and other property if the business fails, according to studies. Exemption statutes establish different categories of property that may not be taken by judgment creditors or by a bankruptcy trustee and allow the entrepreneur to retain certain items such as a home, car, or business equipment.

Most of Pennsylvania’s exemption statutes generally have not been updated since the mid-1800s. Pennsylvania lags behind those of most neighboring states and ranks at the bottom of most categories for state exemptions.

Ohio and other states have a certain dollar amount of protection, while some states offer unlimited homestead protection. This means there is no cap on how much of a home’s equity can be protected.

Pennsylvania has no exemptions for business equipment, a car, firearms, or tools of trade and has no homestead exemption.

“My legislation would provide a fair, yet measured, system to protect the homes and other assets of hard-working residents when faced with a financial crisis,” state Sen. Ryan P. Aument (R-Lancaster) said in a memorandum to all Senate members.