Thursday, October 10, 2019

Ohio Bankruptcy Exemptions

When we think about filing for bankruptcy, we imagine what it will be like to lose everything. But what many people don’t know is that you can actually protect certain property in an Ohio bankruptcy by utilizing the state’s bankruptcy exemption laws. In fact, certain property necessary to live and work, such as your home, retirement account, and personal items can be protected. 

Although some states give residents the choice between federal and state bankruptcy exemptions, in Ohio you must go by the state’s exemptions and possibly the federal non-bankruptcy exemptions (a short list of additional exemptions).

If the property is exempt, you are permitted to keep it both during and after bankruptcy; but if the property is non-exempt, you must sell it in order to pay your unsecured creditors. 

How Do Bankruptcy Exemptions Work?

If you own property of a certain fair market value and the property equity is either equal to or less than the exemption amount, you can keep the property in Chapter 7 and do not have to pay extra to keep it in Chapter 13.  

For example, Ohio has a motor vehicle exemption of $4,000. If you own a car in Ohio that is worth $3,000, under:

Chapter 7 you would get to keep the vehicle since the exemption fully protects the equity. Alternately, if your car is worth $15,000, the bankruptcy trustee would likely sell your car, pay you $5,000 for the exemption and then pay the remaining $10,000 to your unsecured creditors.

Chapter 13 you would not need to pay any extra to your creditors through your repayment plan. However, if your vehicle is worth $15,000, you would need to pay your creditors $10,000 through the plan, unless you have disposable income that would be high enough that they’d receive at least that amount regardless. 

Common Ohio Bankruptcy Exemptions

While there are many different state bankruptcy exemptions, some are more commonly utilized than others. These include:

  • Homestead Exemption
  • Ohio Wildcard Exemption
  • Motor Vehicle Exemption

Other exemptions include things such as the burial plot, a limited cumulative cost of things such as clothing, household good, furnishings, health aids, jewelry. There are also certain pensions, wages, public benefits, insurance, alimony, child support, trade tools, savings plans, and more. 

However, there is still a property that cannot be protected using an Ohio exemption. Certain things will happen to the property that is not exempt. In a Chapter 7 bankruptcy, the bankruptcy trustee who has been appointed to administer the case will sell this property and distribute proceeds to creditors. In Chapter 13 bankruptcy, you may keep what it is that you own, but you must still pay creditors the value of the non-exempt property as well as non-dischargeable debt, or disposable income (whichever is more through the repayment plan).

There are many different bankruptcy exemptions available in the state of Ohio. To see all of them, you can take a look at the Ohio Revised Codes. The next update on exemption amounts is scheduled to occur on April 1, 2022.

What Can You Do?

If you or a loved one is considering filing for bankruptcy, it is important that you understand all of the potential implications that it can have on your life and whether bankruptcy is the best option in your current situation. To do so, it may be in your best interest to consult with a knowledgeable and experienced Ohio bankruptcy attorney. At Miami Valley Bankruptcy, we understand bankruptcy law and will help you to best navigate your situation. To learn more or to schedule a free consultation, contact us today!

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Miami Valley Bankruptcy, Brian Lusardi, Esq., assists clients with Bankruptcy matters including but not limited to: Common Myths, Cost of Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, The New Bankruptcy Law and Personal Bankruptcy in Xenia, Ohio, and the cities of: Wilberforce, Alpha, Spring Valley, Dayton, Bellbrook, Yellow Springs, Cedarville, Fairborn and Clifton; and the counties of Greene and Montgomery.

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