Ohio Chapter 7 Bankruptcy: What Happens to My Property?
If you are considering bankruptcy, you have probably found yourself wondering exactly what, if any, property you own can be taken to pay your creditors. In a bankruptcy case, your property is held in an estate that is managed by a trustee. Theoretically, the trustee is the person responsible for selling off your property and using the money to pay your debts. However, most people who file for Chapter 7 find that they keep all of their property because it is exempt. Exempt property is anything you own that the trustee cannot sell to satisfy your obligations. In other words, when an exemption applies, you get to keep your stuff.
How Bankruptcy Works in Ohio
When you file for bankruptcy in Ohio, you must use the Ohio bankruptcy laws to protect your stuff. All states have their own bankruptcy systems, but some will also allow you to choose the federal system. In Ohio, you do not have that option (it doesn’t make much of a difference because Ohio laws are more favorable to consumers).
If you file for Chapter 7 bankruptcy, a trustee will assess the value of all of your property, and will determine what things are exempt. Then, the trustee will sell all of your non-exempt property (this happens rarely), and give the money to your creditors. After your nonexempt property has been sold, and your creditors have received the proceeds, all remaining debts are then forgiven or discharged.
If you file for Chapter 13 bankruptcy, your lawyer will help you work out a payment plan with your creditors. In this form of bankruptcy, exempt property helps the trustee determine exactly how much you can afford to pay your creditors. Rather than liquidating nonexempt property like in a chapter 7, debtors keep their property in chapter 13 but pay the nonexempt amount as part of their monthly payment.
Therefore, regardless of whether you file for Chapter 7 or Chapter 13 bankruptcy, you will need to understand exactly what things you own are protected. In order to thoroughly understand your bankruptcy case and provide yourself the best protection possible, you should consider speaking with a bankruptcy attorney.
Bankruptcy Exemptions in Ohio
Listed below are some of the most common bankruptcy exemptions utilized in Ohio. If you are married, then you should know that married couples are allowed to “double.” Doubling means that each of the amounts listed below can be applied up to its maximum for the property each spouse. For example, you and your spouse may each exempt your own car up to the full exemption amount.
These amounts refer to the equity value of the asset. The equity value is the amount that the piece of property is worth in liquidation. The “liquidation value” of an asset is the amount that the asset is worth after any liens on the asset are subtracted. For example, if a home worth $100,000 has a $25,000 lien on it, then the home’s liquidation value is $75,000.
- Homestead Exemption: Up to $125,000 of equity in your home is exempt
- Motor Vehicle: Up to $3,675 of value in a motor vehicle is exempt
- Cash: Up to $450 of cash that you currently have is exempt.
- Household Goods: Up to $575 of value in any household item is exempt, for a maximum of $12,250 total value of household goods. This means multiple items can be protected up to $575 a piece, but the total after adding up those items cannot exceed $12,250.
- Jewelry: Up to $1,550 total value for jewelry is exempt. This means $1,550 for ALL of your jewelry, not per item.
- Tools of Trade: Up to $2,325 is exempt. The “tools of the trade exemption” refers to property that is used for a person’s profession or business.
- Life Insurance: The full amount of your life insurance policy is exempt
- Burial Plot: The full amount of your burial plot is exempt.
- Workers’ Compensation: Workers’ compensation benefits are exempt.
- Unemployment Benefits: Unemployment benefits are exempt.
- Retirement Plan: Almost all forms of retirement plans are exempt up to their full amount.
What Else Should I Know?
Again, these are only the most common exemptions that apply in a bankruptcy case. However, every situation is different, and you need to understand the aspects of your unique case. Bankruptcy is a difficult, and often frustrating process, especially if you are inexperienced in this area. Therefore, you should consider speaking with an experienced bankruptcy attorney before filing your case, selling any of your property, or attempting to negotiate with your creditors.