Debt struggles can strike almost anyone in Cleveland. If and when they affect you and your family to the point of having to consider a Chapter 7 bankruptcy, you will likely ask yourself the same question that many have brought to us here at Rauser and Associates Legal Clinic LLP: Can I keep my home? The answer to that question depends on a few different factors, yet there is hope that you will not have to lose what is likely your most valuable asset.
Federal and state bankruptcy laws allow you to exempt the interest that you hold in a number of different personal assets and properties in a Chapter 7 case. Exemption amounts are established at both the federal and state levels. Many states give you the option to decide which to apply to your case. Ohio, unfortunately, does not. The state has opted out of federal exemptions, meaning you must follow its own guidelines.
The Homestead Exemption refers specifically to the exemption on the equity you may have in your residence. According to Ohio law, that amount is $125,000. If you file for Chapter 7 jointly with your spouse, that exemption amount doubles. So, say that your home is valued at $450,000, and you have built up $100,000 in equity in it. The state’s Homestead Exemption allows you to keep the property. If, however, you have $150,000 in equity, the bankruptcy trustee may opt to sell your home to help pay your creditors. Before those parties can be paid, however, he or she must give you the $25,000 in remaining equity you have built.
The Homestead Exemption applies only to the property that you are living in at the time you filed for bankruptcy. More information on protecting assets from bankruptcy is available throughout our site.