Exempt Property in an Ohio Chapter 7 Bankruptcy

Most of the attention on how a Chapter 7 bankruptcy petition works in Ohio focuses on the types of debts that can be discharged. Another aspect of Chapter 7 that needs to be carefully considered by anyone contemplating using it as a means of debt relief is how the law treats property in possession of the debtor.

Although Chapter 7 bankruptcy is a way to eliminate many kinds of debt without having to repay them as one would under a Chapter 13 debt discharge, this does not mean that using Chapter 7 requires no sacrifices on the part of the debtor. The bankruptcy court will attempt to pay creditors at least part of what they are owed. One key way it will make this attempt is by selling off, or “liquidating,” some of the debtor’s assets.

The threshold question when it comes to which assets are subject to a trustee sale depends on examination of both federal bankruptcy law and Ohio state law. Property that can be withheld from an asset sale, or “exempt property,” is generally broken down into categories, some of which are:

  • Homestead exemptions. Whether the debtor’s home is subject to liquidation depends at least in part on if the homestead exemption applies. The federal homestead exemption is $20,000, but Ohio has its own exemption law that offers a much larger exemption.
  • Automobile exemptions. There is a federal dollar limit on this category, but Ohio has its own exemption.
  • Personal property and household goods exemptions. These cover cash and certain types of personal property items. There can be a value limit on personal property above which an item may not be exempt from liquidation.
  • “Wildcard” exemptions. Ohio provides a limited exemption for property that is not covered by other exemptions. This amount may be added to other exempt property valued at more than its stated exemption limit.

Ohio law includes an indexing feature to adjust the state’s exemption dollar amounts based on a consumer price index.

Knowing whether a federal or state exemption applies to any given property item, and the dollar amount of any given exemption, is something that an Ohio bankruptcy attorney can assist with in addition to answering other questions that you may have about Chapter 7 or Chapter 13 bankruptcy laws.