Last updated Nov. 28, 2017.
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 bankruptcy in Ohio 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. The Ohio bankruptcy exemptions are designed to make sure you’re left with enough property to live — bankruptcy is no good if it leaves you homeless!
Ohio Bankruptcy Basics
When you file for bankruptcy in Ohio, you must use the Ohio bankruptcy exemptions 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, though it doesn’t make much of a difference because Ohio laws are more favorable to consumers.
If you qualify for and file 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 must pay the nonexempt amount as part of their monthly payment.
Your total payments in a Chapter 13 plan have to be equal to or greater than the amount your creditors would have gotten under Chapter 7 — otherwise you’ll have to file under Chapter 7.
Ohio Chapter 7 Bankruptcy Exemptions
Listed below are some of the most commonly used Ohio bankruptcy exemptions. 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.
Note that some of these rules change over time. Below are the most recent Ohio bankruptcy exemptions, so contact your bankruptcy lawyer to learn if these amounts have been updated:
- Homestead exemption: Up to $136,925 of equity in your home.
- Motor vehicle: Up to $3,775 of value in a motor vehicle.
- Cash: Up to $475 of cash on hand or deposit.
- Household goods: Up to $600 of value in any household item is exempt, up to a maximum of $12,625 total. Single items worth more than $600 each are not exempt, even if the total including those items is less than $12,625.
- Jewelry: Up to $1,600 in jewelry (that’s total, not per item).
- Tools of the trade: Up to $2,400 of property that you use for your job or your business, including books and implements.
- Claims for personal injury: Up to $23,700 of awards from personal injury lawsuits that you’ve won.
- Life insurance: The full amount of your life insurance policy.
- Burial plot: The full amount of your burial plot.
- Workers’ compensation: The full amount of any workers’ compensation benefits.
- Unemployment benefits: The full amount of any unemployment benefits.
- Retirement plan: Almost all forms of retirement plans are fully exempt.
- Wildcard: Up to $1,250 of value in any property you choose; you can add it on to other exemptions or use it to protect something not covered by the exemptions.
What else should I know about Ohio bankruptcy laws?
Again, these are only the most common exemptions that apply in a bankruptcy case and there are some complicated exceptions that may apply. Reach out to an experienced bankruptcy attorney before filing your case, selling any of your property, or attempting to negotiate with your creditors to ensure that your rights are protected and that you can manage your debts in the best way for your goals.