Bankruptcy Questions Answered: What Property Is Exempt In Chapter 7 and Chapter 13 Bankruptcy?

There is a common belief that filing for bankruptcy in Ohio means that you will be left destitute; without debts, yes, but also without the things you need to live. Thankfully this persistent notion couldn’t be further from the truth. Since bankruptcy is a way to start fresh and get your financial feet under you again, it makes sense that individuals who file for bankruptcy in Ohio are entitled to exemptions on property that they need to rebuild their financial health. Here we’ll discuss what the average Ohioan can expect as exempt property in a chapter 7 or chapter 13 bankruptcy filing.

Exemptions for Bankruptcy in Ohio

If you pass the means test and it’s determined that you cannot afford to repay your debts, when you file for chapter 7 your bankruptcy attorney will work out with the trustee whether or not you have any non-exempt assets that can be sold and the proceeds then used to pay creditors. This leads many individuals to wonder if they can keep their car, house, cell phone, or other property when filing for bankruptcy in Ohio. In general, most chapter 7 filers will not have much, if any, non-exempt property and so will likely be able to retain most of their belongings.

The same bankruptcy questions come up for those who do not pass the means test and will need to file for chapter 13 bankruptcy. They may wonder if they can keep their car or other items. In the end, this really centers on the value of their property against the amount that Ohio bankruptcy exemption guidelines allow. 

One key thing to know here is that while the exemption amounts do not change for chapter 7 or chapter 13 bankruptcy filings, how they are applied will be different. In chapter 7 cases, exemption amounts determine the property that you can keep. Property valued higher than allowed exemptions will generally be sold in order to repay creditors. In chapter 13 bankruptcy cases, exemption guidelines help to determine how much of the value of your property will factor into your repayment plan. Property with values greater than allowed exemptions will not be sold; instead you will simply need to repay the balance. 

In general, and regardless of which type of bankruptcy filing works best for your circumstances, so long as the property in question is protected by Ohio bankruptcy exemption laws, you can most likely keep it. Let’s break down the details and get some clear cut numbers and answers.

Ohio Bankruptcy Exemptions

Before reviewing the list below, it’s important to know how exemptions work in bankruptcy. Unlike other states that may give filers a choice between state and federal exemption amounts, bankruptcy in Ohio requires that filers work within the limits of official state exemptions. It’s also key to understand that while the term “value” is thrown around alot, it refers more to the value of your interest in the property–the equity–than the actual value of the property itself. 

The value of a vehicle, for example, would be the portion of a loan you have already repaid to the lender. For a $25,000 loan that now stands at $20,000, the $5,000 you’ve already repaid would be the determined “value.” While it sounds counterintuitive, bankruptcy can often work out better for folks who still owe a good bit on their vehicles. That said, this is not a reason to try and play the system and go on a shopping spree prior to filing for bankruptcy in Ohio–the court will investigate to determine intent and you could be worse off in the end. If you have fallen behind on payments, getting those current is also vital. And if your vehicle is fully paid for and worth less than or as much as the current exemption limit, don’t worry, it’s covered. 

For those who do end up with non-exempt property, your bankruptcy attorney can devise a repayment plan under a chapter 7 filing that factors in the sale of non-exempt items. The trustee can then use those proceeds to help repay creditors. Your experienced Ohio bankruptcy lawyer can help you to determine whether it is best for you to file for chapter 7 or chapter 13 bankruptcy, based in part on your exempt and non-exempt property values. Remember that married individuals filing for bankruptcy jointly can “double” the listed values, meaning that each person can employ the maximum applicable exemption to their property.

• • Homestead Exemption: Up to $161,375
  • Motor vehicle: Up to $4,450
  • Cash: Up to $550, whether on hand or deposit
  • Household goods: Up to $14,875 total, with no single item valued over $700
  • Jewelry: Up to $1,875 total
  • Tools: Up to $2,825 of work-related property, including books and implements
  • Personal injury awards or settlements: Up to $27,950
  • Life insurance: The full amount
  • Burial plot: The full amount of one plot
  • Wages: The full amount of workers’ compensation, unemployment benefits
  • Retirement plans: Almost all are exempt, including private pensions, 401(k), 403(b), and profit-sharing plans
  • Wildcard: Up to $1,475 of value can be added to a property’s value or applied to something that falls outside of official exemptions
  • Child or spousal support: Whatever is reasonably necessary for you and your dependents
  • Health aids: Professionally prescribed equipment for you or a dependent

We cannot list every single available exception, but just know that if you have come to a point in your life where filing for bankruptcy seems like the best way forward, you won’t be forced to start over with nothing to your name. For details on more specific property exemption guidelines, feel free to contact the team at Hausen Law. 

Ohio’s legislature periodically makes updates to exemption totals, based on current inflation levels. The numbers we’re working with right now should be accurate until March of 2025, unless the state legislature decides to make a change sooner than that. Your trusted bankruptcy attorney will always be able to keep you up-to-date on current exemption limits.

Get Your Bankruptcy Questions Answered By an Experienced Bankruptcy Attorney

If you’re facing bankruptcy and you’re worried about losing your home, car, or other property, don’t be! Exemptions exist in order to help you keep a necessary level of stability while also discharging and/or repaying debt. Both chapter 7 and chapter 13 bankruptcy differ in how exemptions are applied, but it’s good to know that when filing for bankruptcy in Ohio, you’ll get the chance to start over while still keeping vital property.

If it looks like bankruptcy is in your future, working with an experienced chapter 7 bankruptcy lawyer–like James Hausen and his team–is a great first step to take. Our Ohio bankruptcy lawyers are always ready to help and will fight for your best outcome possible. Give us a call or fill out our online contact form and we will be in touch. Hausen Law is happy to serve all of Northeast Ohio, including the Akron, Canton, Cleveland, Wooster, Dover/New Philadelphia, and Youngstown communities. Contact us today to set up a free consultation.