There are many people in Ohio who still struggle financially, even though the Great Recession has officially ended. Many in Ohio struggle to make the minimum monthly payments on their debts. Some worry about foreclosure on their homes. Others can pay for their housing but have fallen far behind with other expenses, like credit cards and medical debt.
Depending on the situation, these individuals may benefit greatly from filing for bankruptcy protections. Bankruptcy could allow some of these individuals to seek a fresh financial start, unhampered by the massive monthly expenses associated with unsecured debts. A common and persistent bankruptcy myth may prevent these people from seeking relief. Many people still believe that they will for sure lose their home in a bankruptcy filing.
Your home could have protection in both kinds of bankruptcy
Those who own their homes outright, have decades worth of equity or make a decent wage may not qualify for Chapter 7 bankruptcy or not be in a situation in which such a bankruptcy would be attractive. In other cases, they worry about some of the equity in the home ending up liquidated as a result of Chapter 7 bankruptcy. Chapter 13 bankruptcy could protect all the equity in your home, provided that you follow the court-approved repayment plan.
For those with less equity or limited income, Chapter 7 bankruptcy might be a solid option. In this form of bankruptcy, you don't have to adhere to a repayment plan before the discharge of your debts. Instead, some of your assets receive protection under exemption laws, others get sold by the courts and your unsecured debts get discharged. However, the common worry here is that homeowners will need to liquidate equity in their home.
Ohio actually offers a generous homestead exemption
For those filing Chapter 7 bankruptcy, the law protects your right to ongoing possession of certain assets. Some of these items include a certain amount of value in a personal vehicle, small amounts of cash on hand and household goods. There is also an exemption that protects the equity in your primary residence.
Those filing for bankruptcy as an individual can exempt as much as $132,000 in equity if the home is in just one person's name. If there is a married couple filing jointly for bankruptcy protections, the amount of protected equity increases to $264,000.
While it is true that you can only protect a certain amount of your equity in Chapter 7 proceedings, many times those whose income passes the means test also find that the equity in their home is fully protected under the expanded state homestead exemption.