If you are considering bankruptcy as an option for debt relief in Ohio, you may be wondering how bankruptcy exemptions work. Understanding bankruptcy exemptions by state can be crucial when deciding whether or not Chapter 7 or Chapter 13 bankruptcy is the right fit for your situation.
Are you wondering what bankruptcy exemptions are and what Ohio bankruptcy exemptions you qualify for? If so, check out this article, where we will be discussing Chapter 13 and Chapter 7 bankruptcy exemptions in Ohio.
How Do Bankruptcy Exemptions Work in Ohio?
In Ohio, bankruptcy exemptions are there to shield essential assets from creditors so that they are not seized during bankruptcy proceedings. Any resident of Ohio can take advantage of Ohio bankruptcy exemptions as long as you have lived in the state for at least two years. The downside to this is that you cannot use federal exemptions like you can in some other states.
However, Ohio residents may be able to utilize certain federal non-bankruptcy exemptions that can protect things such as:
- Social Security benefits
- Federal and military retirement benefits
- Veterans benefits
- Any other federally protected benefits
When you file for bankruptcy in Ohio, you are agreeing to let the Ohio bankruptcy court initiate temporary control of your assets, which become part of your bankruptcy estate. When this happens, your estate is divided into two groups: exempt property and non-exempt property. Exempt property are belongings that you are allowed to keep when you file for bankruptcy, while non-exempt property are items that are not protected and may have to be sold to repay your creditors.
Here are some of the most common bankruptcy exemptions in Ohio:
- Homestead exemption: Ohio’s homestead exemption is generous, allowing you to protect up to $161,375 of equity in real property that you use as a primary residence. This amount goes up significantly for married couples who file for bankruptcy jointly.
- Motor vehicle exemption: Ohio’s personal property bankruptcy exemptions help to protect equity in motor vehicles up to $4450, which is the market value of your vehicle minus what you owe on your car loan.
- Personal property exemptions: Ohio’s personal property exemptions can be a bit confusing since they cover a variety of items. For instance, this is part of the exemption that allows you to protect your motor vehicle. Other types of personal property exemptions available include things like personal injury awards, burial plots, jewelry, cash, furniture, or household goods. Each type of property has its own individual exemption amount.
General Bankruptcy Exemptions
Aside from the most common Ohio bankruptcy exemptions, there are a variety of other exemptions that may apply to specific situations. These general exemptions include things such as:
- Wild card exemption: A wild card exemption allows you to protect any property that you choose up to $1475. You can use this on any asset that isn’t protected by Ohio state law, or you can add the exempt dollar amount to increase the exemption for another type of personal property.
- Alimony and child support exemption: Alimony and child support payments are considered to be reasonably necessary, which is why they will be protected when you file for bankruptcy.
- Public benefits exemptions: Ohio exemptions offer protection for most public benefits, such as disability assistance, unemployment compensation, child tax credit, and vocational rehabilitation benefits.
- Insurance exemptions: Ohio provides several insurance exemptions for things like disability benefits, life insurance cash value if the beneficiary is your spouse or dependent, group life insurance policy proceeds that you have not yet received or don’t expect to receive in the six months after filing, and up to $5000 of benevolent society benefits.
- Retirement exemptions: Ohio protects almost all forms of retirement plans so that they will not be impacted by creditors.
- Tools of the trade exemptions: Ohio protects up to $2825 worth of property that you use for your job or business.
Seeking the help of a bankruptcy attorney ensures you can take advantage of all of the bankruptcy exemptions you may qualify for.
Chapter 7 Vs. Chapter 13 Bankruptcy Exemptions
Whether you file for Ohio Chapter 13 bankruptcy or Chapter 7 bankruptcy, different exemptions will apply for each type of bankruptcy case. Before you proceed with filing for bankruptcy, you need to hire a bankruptcy attorney who can help you find the best solution for your financial situation and financial goals.
Getting the help of a bankruptcy attorney is especially important in more complex bankruptcy cases or for couples who are filing jointly. Different factors will impact the exemptions you qualify for and how substantial they are depending on the type of asset.
Here is an overview of what bankruptcy exemptions look like when you file for Chapter 7 or Chapter 13.
Chapter 7
If you choose to file for Chapter 7 bankruptcy, you have to list all of your assets, which provides the opportunity for you to easily claim exemptions for your assets. This can get a bit more complicated if you are one of the rare Ohio residents who has non-exempt property. In many cases, those who have non-exempt property will choose to file Chapter 13 instead to avoid losing those assets.
Something else to understand about Chapter 7 bankruptcy is that you need to be caught up on essential payments, such as your mortgage or car payment. If you are behind on these payments when you file for Chapter 7 bankruptcy, you may lose this property.
Chapter 13
If you have decided to go ahead with filing for Chapter 13 bankruptcy, your attorney will help you create a repayment plan, which will need to be approved by the court. Having non-exempt property will not require you to sell it but it may impact how much you have to repay your creditors.
Chapter 13 protects you from losing property as long as your repayment plan is approved, even if you are not up-to-date with your payments. However, you have to prove that you have the ability to make monthly payments and pay any late payments.
Contact a Family Law Attorney in Ohio
Are you considering bankruptcy as an option to alleviate debt in Ohio? Richard P. Arthur, Attorney at Law, can help you navigate the complexities around filing for Chapter 7 and Chapter 13 bankruptcy in Ohio. Richard P. Arthur has handled hundreds of bankruptcy cases across the state and can help you understand bankruptcy exemptions and which ones you qualify for. Contact us today at 937-254-3738 for a consultation.