Bankruptcy Exemption Basics in Ohio
There is a common misunderstanding that those filing for Chapter 7 bankruptcy will lose their possessions, including their family's home and car. The truth, however, is that most filers will be able to keep the majority of their property - including the house and one car - thanks to the exemptions available under Ohio law.
November 19, 2010
Many people may be wary of filing for bankruptcy because they have heard that they will lose many of their assets, including their homes and cars. The truth, however, is that many of those filing for Chapter 7 or Chapter 13 bankruptcy will be able to keep most of their personal possessions.Below you will find information on the available bankruptcy exemptions under Ohio law. For more information on how these exemptions will apply to your specific case, contact an experienced bankruptcy attorney.
Keeping the House, the Car and Your Retirement Accounts
Under Ohio law, certain types of property are considered exempt during bankruptcy. This means that in a Chapter 7 filing, the bankruptcy trustee cannot take certain property, either up to a certain value or at all, and sell it to satisfy some of the filer's debt. However, any property that is above the exemption amount or not covered by an exemption may be subject to a trustee sale.
Three of the most important exemptions under Ohio law are for the house, the car and retirement accounts:
- The homestead exemption: Under Ohio's exemption statute (ORC ?2329.66), individuals filing for bankruptcy are allowed to exempt up to $21,625 in equity in their primary residence. Those filing jointly are allowed to double the amount to $43,250. If there is still a mortgage on the property, the equity is determined by subtracting the amount owed on the mortgage from the value of the property. The value is the current, real market value of the property if you were to sell it today. For example, if your home is worth $200,000 and you owe $180,000 on the mortgage, then the amount of equity you would own in your home is $20,000 -- well within the homestead exemption.
- Household goods exemption: In addition to keeping up to $20,200 in equity in the family home, Ohio law also permits bankruptcy filers to exempt up to $11,525 in household goods, including furniture, clothing, appliances, books, musical instruments, guns and other hunting and fishing equipment. The exemption also applies to crops and animals.
- The auto exemption : State law also allows individual Chapter 7 filers to exempt up to $3,450 in equity for one car. Determining the equity in the automobile is the same as it is for the home: if you are making payments on the car, then you subtract the amount you owe on the loan from the current real market value of the car. If you own the car outright, then you are allowed to exempt up to $3,450 of the car's real market value from bankruptcy. It is important to keep in mind that the real market value is not what you paid for the automobile, even if you just bought it yesterday; it is what the car currently is worth, which may be markedly less than the sticker price.
Retirement account exemptions
In general, all of the money you have in your retirement accounts is exempt from bankruptcy proceedings. This includes 401ks, IRAs, Roth IRAs, pensions, annuities, education individual retirement accounts, Keogh IRAs, H.R. 10 plans, PERS Deferred Compensation and Ohio Public Safety Officers Death Benefit Funds and other tax exempt retirement funds, including direct transfers and rollover distributions.
Your paycheck
The majority of Chapter 7 filers will be able to keep most if not all of their current paychecks. Ohio law provides that a maximum of 2.75% of disposable earnings or 60 times the federal minimum wage (if paid bi-weekly) may be exempted from bankruptcy, whichever amount is greater. (For those paid weekly, it is 30 times the federal minimum wage and those paid monthly is 100 times the federal minimum wage).
Additional Exemptions
Some of the other exemptions that are available under Ohio law include:
- $400 in cash
- $1,450 in jewelry
- $2,175 for tools of your trade, business or profession
- $21,625 from a personal injury award
Bankruptcy filers are allowed to exempt the full value of the following assets:
- Life insurance proceeds
- Health insurance proceeds
- State and federal benefit programs, including workers' compensation, disability and unemployment benefits
- Ohio Works First Cash Assistance
- Benefits-services from prevention, retention and contingency programs
- Child and spousal support
- Federal earned income tax credit and child tax credit
- Tuition payment contracts
- Reparations for crime victims
- Awards in wrongful death actions
- Partnership property
- Seal and register of public notary
- Health aids
- Burial lots
The Wildcard Exemption
Lastly, Ohio law provides a general exemption up to $1,150 that may be used by filers to provide additional equity protection to any of the exemption classes. For example, if you had $4000 in equity in your car, you could use some of the wildcard exemption amount to fully protect your car from the bankruptcy.
Conclusion
Those who have found themselves struggling with debt should not write off bankruptcy as an option before speaking with an attorney. Last year, Ohio expanded the value of its exemptions to make it easier for those filing for bankruptcy to keep more of the property they have worked so hard to acquire.
These exemptions, however, may not protect all of your property from a trustee sale. It is important to approach bankruptcy with an open-mind, just in case you cannot save all of your assets from liquidation.
An attorney experienced in bankruptcy can determine which exemptions apply to your case and help you determine which, if any, property you may have to forfeit. For more information on bankruptcy exemptions, Chapter 7 or Chapter 13, contact a knowledgeable bankruptcy lawyer today.
Article provided by Harold Jarnicki & Associates
Visit us at www.haroldjarnickiandassociates.com/