Filing for bankruptcy could appear intimidating, especially if there are concerns over how laws may allow an individual to keep certain types of property. A common myth is that petitioners must always sell their house, car or other assets to pay back creditors.
During the legal proceedings, a court may find that some individuals could afford to pay back their creditors by selling certain property or assets. The items may, however, reflect personal necessities.
The law recognizes that everyone needs a home and that the majority of individuals require a car for work. As noted by Bankrate, an auto loan or mortgage lender may allow a borrower to sign a reaffirmation agreement as a means to keep the property by making payments after a bankruptcy. An individual must then confirm this arrangement through his or her personal bankruptcy petition.
Federal bankruptcy exemptions
Unlike several other states, Ohio does not permit residents to claim the federal bankruptcy exemptions that Congress created. These exemptions tie in with the Consumer Price Index and increase every three years.
Although federal bankruptcy exemptions do not apply in Ohio, residents may petition for the federal non-bankruptcy exemptions. These protect certain types of personal property from creditors when there is no bankruptcy petition filed. When filing in Ohio, individuals may also apply for the federal non-bankruptcy exemptions. If granted, they can protect property such as tools, musical instruments and pension plans, in addition to a house and car.
Ohio state-level exemptions
Petitioners may claim several state-level exemptions. These generally allow married couples filing jointly to claim twice as much as single filers. The homestead exemption typically allows an Ohio filer to protect up to $145,425 of a primary residence’s equity value. A motor vehicle’s equity value up to $4,000 could fall under the state’s exemptions.
Ohio petitioners may also apply for a “wildcard” exemption, which protects up to $1,325 of any personal property of their choice. Individuals or joint petitioners may request protection for cash, insurance policies, pensions or other assets this way.