Ohio Bankruptcy - Exemptions and How They Can Help You

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  • 8/14/2019 Ohio Bankruptcy - Exemptions and How They Can Help You

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    SCOTT R. NEEDLEMAN

    BANKRUPTCY AND FORECLOSURE DEFENSE ATTORNEY

    OHIO BANKRUPTCY EXEMPTIONS AND HOW THEY

    CAN HELP YOU

    A Look At Ohio Bankruptcy Exemptions

    and How It Can Help You Retain the Majority

    of Your Assets When You File for Bankruptcy

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    io BankruptcyExemptions and How They Can Help You thecolumbusbankruptcylawyer.com

    Each year, millions of hard-working individuals find themselves facing

    financial difficulties that appear to have no solution. Due in large part to

    the recession the United States recently experienced the number of people

    who are struggling financially has increased dramatically. As a result, the

    number of bankruptcy petitions filed across the country has reached record

    highs. The decision to seek protection by filing for bankruptcy is never an

    easy decision to make; however, it is often the best solution. One of the

    most common reasons why people are hesitant to file bankruptcy is the

    fear that filing for bankruptcy means losing assets-assets that have taken a

    lifetime of hard work to acquire. While this fear is certainly understandable,

    it is largely unfounded. Most debtors are able to keep their home, vehicle,

    and a variety of other assets when they file for bankruptcy by utilizing the

    Ohio bankruptcy exemptions.

    BANKRUPTCY BASICS CHOOSING A CHAPTER

    To understand how the Ohio bankruptcy exemptions fit into the overall

    bankruptcy process you first need a basic understanding of bankruptcy.

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    The U.S. Bankruptcy Code allows an individual debtor to file for bankruptcy

    protection under chapter 7, 11, 12, or 13. Although Chapter 11 can be

    used by an individual it is more commonly utilized by a small business.

    Chapter 12 is limited to those who qualify as a family fisherman or family

    farmer. Therefore, most debtors file under either chapter 7 or chapter 13

    when they file bankruptcy.

    A debtor must qualify under what is referred to as the "means test" in

    order to file a chapter 7 bankruptcy. The means test requires a debtor to

    perform a series of calculations aimed at determining whether the debtor's

    income is at or below the median income for similarly situated households

    in Ohio. If the debtor does not qualify under the means test then a chapter

    13 must be used. A debtor may also choose to file a chapter 13 even if he

    or she qualifies to file a chapter 7.

    A chapter 7 bankruptcy is often referred to as a "liquidation" bankruptcy"

    while a chapter 13 is known as a "wage earners" bankruptcy. The names

    are both somewhat

    deceiving. In a chapter 7

    bankruptcy a debtor's non-

    exempt assets are subject

    to be confiscated by the

    bankruptcy trustee,liquidated, and the proceeds used to pay creditors; however, in reality

    most chapter 7 debtors are able to use the applicable exemptions to

    protect most, or even all, of their assets. A debtor whose income is too

    high to qualify under the chapter 7 means test, or who has valuable assets

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    io BankruptcyExemptions and How They Can Help You thecolumbusbankruptcylawyer.com

    that are not exempt, will need to file a chapter 13 bankruptcy. In a chapter

    13 bankruptcy the debtor is required to develop a repayment plan that

    allows the debtor to repay most of his or her debts over an extended

    period of time, typically three to five years.

    WHAT ARE EXEMPTIONS?

    Exemptions are what allow a debtor to retain property and other assets

    during the bankruptcy process. If an asset is exempt that essentially means

    that it is out of reach of the court or trustee and cannot be used, or sold,

    to repay any of the debtors debts. In addition, if you are married and file a

    joint petition with your spouse you are entitled to double your exemptions

    allowing you to protect more assets.

    FEDERAL VS.STATE EXEMPTIONS

    Thankfully, the bankruptcy laws in the United States do not require a

    debtor to forfeit everything the debtor owns in order to take advantage of

    the protection offered by filing for bankruptcy. On the contrary, exemptions

    are built-in at the federal level and in many cases at the state level as well.

    The ability to file for bankruptcy protection is found in federal statutes in

    the United States, meaning that the federal court system has jurisdiction

    over bankruptcy proceedings in the U.S. This also means that with few

    exceptions the process and procedures for a debtor filing bankruptcy in one

    state are the same as a debtor filing in another state. The most prominent

    exception to that general rule relates to exemptions.

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    The U.S. Bankruptcy Code includes exemptions that a debtor may be able

    to use; however, the individual states are also allowed to create their own

    set of exemptions. The state in which a debtor is considered a resident at

    the time the bankruptcy petition is filed will determine which set of

    exemptions the debtor is allowed to use. Some states require a debtor to

    use the federal exemptions while other states require a debtor to use the

    state exemptions. Still other states allow a debtor to choose either the

    federal or state exemptions but a debtor cannot mix the two. In Ohio a

    debtor is required to use the state exemptions, meaning the federal

    exemptions are not an option for a debtor filing bankruptcy in Ohio.

    OHIO EXEMPTIONS

    The list of exemptions to which you are entitled if you file bankruptcy in

    Ohio is lengthy; however, there are some commonly used exemptions that

    provide you with an idea of how much you can protect when you file for

    bankruptcy.

    Homestead $132,900

    Vehicle $3,675 in one motor vehicle

    Household Goods $12,250 total and up to $575 in a single item

    Cash $450

    Wages 75 percent of wages

    Retirement/Pensions

    IRAS and Roth IRAs to $1,171,150 plusprivate pension and tax-exempt retirement accounts

    Benefits unemployment and workers compensation benefits

    Wildcard -- $1,225 in any asset not covered elsewhere

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    As you should be able to see the average debtor is able to exempt a

    significant amount of assets. Remember as well that if you are filing a joint

    petition with a spouse the exemption amounts are doubled.

    EXEMPTIONS AND SECURED DEBTS

    As a debtor it is important that you understand how an exemption operates

    if it is being used to protect a secured debt. And exemption can protect an

    asset from being sold to repay creditors

    during the bankruptcy process;

    however, an exemption does not

    release a debtor from liability for the

    debt. By way of example, let's assume

    that you own your home that was

    purchased by taking out a mortgage

    loan. The lender from whom you

    borrowed the money to purchase the home is considered a secured

    creditor because the home is considered collateral, or security, for the loan.

    Let's further assume that the current market value of your home is

    $200,000 and that the balance owed on your mortgage loan is $150,000.

    You have $50,000 of equity in your home, all of which can be protected by

    using the Ohio Homestead exemption when you file for bankruptcy. The

    Homestead exemption operates to protect your home from the trustee

    selling the home and using the equity you have built up in the home to

    repay creditors. You still, however, owe the lender $150,000 on the

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    mortgage loan. To keep your home you will need to enter into a

    reaffirmation agreement with your lender during the bankruptcy process.

    With a better understanding of how the Ohio bankruptcy exemptions

    operate you should find that many of your fears regarding the bankruptcy

    process have disappeared. Although each debtors situation is unique, and

    only an experienced Ohio bankruptcy attorney can provide you with

    specific advice, it should be clear that most debtors are able to retain the

    majority of their property while still addressing their financial crisis by filing

    for bankruptcy protection.

    Ohio State Bar Association,Ohio Law Allows Property Exemptions in

    Bankruptcy

    NOLO,Ohio Bankruptcy Exemptions

    U.S. Courts,Bankruptcy Basics

    http://thecolumbusbankruptcylawyer.com/https://www.ohiobar.org/ForPublic/Resources/LawYouCanUse/Pages/Ohio-Law-Allows-Property-Exemptions-in-Bankruptcy.aspxhttps://www.ohiobar.org/ForPublic/Resources/LawYouCanUse/Pages/Ohio-Law-Allows-Property-Exemptions-in-Bankruptcy.aspxhttps://www.ohiobar.org/ForPublic/Resources/LawYouCanUse/Pages/Ohio-Law-Allows-Property-Exemptions-in-Bankruptcy.aspxhttps://www.ohiobar.org/ForPublic/Resources/LawYouCanUse/Pages/Ohio-Law-Allows-Property-Exemptions-in-Bankruptcy.aspxhttp://www.nolo.com/legal-encyclopedia/ohio-bankruptcy-exemptions.htmlhttp://www.nolo.com/legal-encyclopedia/ohio-bankruptcy-exemptions.htmlhttp://www.nolo.com/legal-encyclopedia/ohio-bankruptcy-exemptions.htmlhttp://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics.aspxhttp://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics.aspxhttp://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics.aspxhttp://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics.aspxhttp://www.nolo.com/legal-encyclopedia/ohio-bankruptcy-exemptions.htmlhttps://www.ohiobar.org/ForPublic/Resources/LawYouCanUse/Pages/Ohio-Law-Allows-Property-Exemptions-in-Bankruptcy.aspxhttps://www.ohiobar.org/ForPublic/Resources/LawYouCanUse/Pages/Ohio-Law-Allows-Property-Exemptions-in-Bankruptcy.aspxhttp://thecolumbusbankruptcylawyer.com/
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    About the Author

    Scott R. Needleman

    Every associate at The Needleman Law Office is committed to handling

    your case in both a personal fashion and in a professional manner. In other

    words, we treat you the way we would want to be treated. We will take a

    personal interest in your situation, making sure you understand exactly

    what is happening and what options you may have. Then well fight to

    ensure the best possible outcome for your situation.

    The Needleman Law Office5300 E. Main, Suite 109Columbus, OH 43213614-575-1188

    http://thecolumbusbankruptcylawyer.com/

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