What Is Non-Exempt From Bankruptcy in Ohio?

by Tom Streissguth
Ohio law exempts a limited amount of equity in your personal residence.

Ohio law exempts a limited amount of equity in your personal residence.

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Filing for Chapter 7 bankruptcy means giving up property in order to pay your creditors. The bankruptcy law exempts some property, allowing you to keep it for personal use. Although there are federal and state laws governing exemptions, in Ohio, bankruptcy filers must follow state guidelines in claiming exemptions.

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A bankruptcy case begins with the filing of a petition in federal bankruptcy court. The court will issue an automatic stay, protecting you from collection actions and lawsuits. In a Chapter 7 bankruptcy, a court-appointed trustee seizes your property and sells it in order to pay your debts. In a Chapter 13, the trustee sets up a repayment schedule, which allows you to pay a portion of your unsecured debts over a period of three to five years. At the end of a successful bankruptcy case, the court discharges -- that is, cancels -- unsecured debts. Some debts can't be discharged in bankruptcy, including federal taxes, federally guaranteed student loans, child support, alimony, and criminal restitution fines.

Means Test

By an important bankruptcy reform law of 2005, the law imposes a means test on Chapter 7 bankruptcy filers. The means test is required for anyone whose income falls above their state's median income, according to household size. In the means test formula, the law allows you to deduct certain household and living expenses. If you can still afford to pay a minimal amount on your debts, you may be barred from filing Chapter 7, or forced to file for a Chapter 13 repayment plan.

Exempt Assets

Ohio law provides a series of exemptions for people in bankruptcy. These include $21,625 in equity in a personal residence. This means that if you own a house, and are paying a mortgage, the lender must allow you to keep that exemption amount if the house is foreclosed and sold. In addition, equity of $3,450 in a car is exempt. The bankruptcy trustee must allow you to keep that amount if he sells the car to pay your debts. Ohio exempts $425 in savings in a bank, $1,450 in jewelry, and $2,175 in professional tools, equipment and books. Life insurance policies, workers' compensation benefits, unemployment compensation, disability insurance benefits and burial plots are also exempt from seizure by the trustee.

Non-Exempt Assets

Ohio law provides that a second home or car is non-exempt, as is any personal savings, property, tools and furniture above the exemption amounts, in the aggregate. This means that any jewelry you own, for example, that places the total worth of your jewelry over and above $1,350, may be seized and sold by the bankruptcy trustee to repay creditors, and bank deposits of more than $425 are also subject to seizure. Savings and investments above this amount are non-exempt, as are IRAs and pensions if they are not required for the debtor's ongoing expenses and support. Debtors may keep non-exempt property by signing a reaffirmation agreement, if there is a lender with a claim on the property, or by arranging a payment to the trustee for the resale value of the property.