One of the most terrifying things about deciding to file for bankruptcy is the possibility of losing your assets, including your home, your personal vehicle, and anything else of value you've acquired, purchased, or inherited over the years.
Bankruptcy, particularly Chapter 7 bankruptcy, offers those with large amounts of personal debt to discharge some of those financial liabilities. However, to do so, the person filing for bankruptcy debt relief must provide the bankruptcy courts with accurate documentation regarding their assets, including the equity in their home and any other real estate they may own.
Is your primary residence exempt from bankruptcy in Ohio?
Every state has different exemption amounts when it comes to what personal property a person may retain when filing Chapter 7 or Chapter 13 bankruptcy. Most states use the adjusted average home price as a basis for the value of a home or amount of equity considered exempt from bankruptcy proceedings.
In Ohio, the maximum exempt value of a home during bankruptcy is currently $132,000. That exemption amount is per individual. This means that if you jointly own your primary residence with your spouse, the value of the home may be as much as $264,000 and still be exempt.
What if the home value exceeds the limit for the exemption?
If your home value exceeds the state exemption amounts, the courts may require that you withdraw some of your equity as a means of repaying your creditors. In extreme cases, the courts may even require the sale of the primary residence, with the person filing for bankruptcy retaining the exempt amount of equity to secure new housing.
This is when working with an experienced bankruptcy attorney can really benefit those going through Chapter 7 bankruptcy proceedings. An attorney can help ensure that the home is properly valued and that your case is properly presented.
What if I owe more than the home is worth or have no mortgage?
For those who have home values that are lower than the amount still owed on the mortgage, the courts generally do not intervene, other than by issuing a temporary stay on collections or eviction during the initial filing process. Banks may be more amenable to working with borrowers on these "upside down" mortgages if an attorney is helping advocate on the owner's behalf. If your home value falls below the state exemption amounts, regardless of whether you carry a mortgage on the property or own it outright, the exemption applies to your home during your bankruptcy.
An experienced bankruptcy attorney can help minimize the fallout
If your debt has spiraled out of control and you are seriously considering bankruptcy, working with an experienced Ohio bankruptcy attorney is the best way to protect yourself, your family, and your financial future. You don't have to lose everything when you file. By working with professionals who will advocate for your best interests, you improve your odds of a positive outcome and faster recovery from the bankruptcy process.