When it comes to filing for bankruptcy, one large factor that comes into play is what types of property you have–exempt or non-exempt. While this may mean nothing to you now, it’s incredibly important for determining if you should file for Chapter 7 or Chapter 13 bankruptcy.
But what is exempt property and how does it change your filing status?
During Chapter 7 bankruptcy, liquidation of assets must occur so that the bankruptcy trustee can use some of the funds to pay off certain debts. But what property is exempt and not exempt from the liquidation is a very real concern for many considering Chapter 7 bankruptcy.
In general, the following would be considered non-exempt property, and thus subject to liquidation:
Some assets are considered exempt from liquidation, which must be filed with the court for approval. These include:
While this is not a fully exhausted list, it gives you an idea of what you will not lose out on in your bankruptcy filing. But knowing how it works can be complicated.
In Ohio, it is important to note that you must follow state bankruptcy exemptions–not federal. Some states allow you to pick which exemptions you file under, but Ohio is not one of them. However, you can still couple your filing with federal nonbankruptcy exemptions which include: Retirement benefits for those in the military, railroad industry, veterans, etc. Also, it allows survivors to collect federal benefits, allows filers to collect death and disability benefits, and a variety of military and government earned benefits.
Your trustee may also offer you some flexibility as a trustee may abandon property that is only slightly greater than the exemption amount, as it is not worthwhile to use to pay back debts.
If you are unsure if your benefits or assets are exempt or non-exempt, it’s important to meet with a bankruptcy attorney and ask questions. Failure to provide accurate information to your trustee and the court can result in your case being dismissed, leaving you in financial hardship.
If you are married and filing for bankruptcy, you and your spouse will have the option to file jointly or separately.
Under federal and Ohio bankruptcy laws, if you file for Chapter 7 bankruptcy jointly, you get double the exemptions as listed above. But, if one person has a larger amount of non-exempt separate property, it may be in your best interest to file separately as the non-filing spouses’ separate property won’t be included in the bankruptcy filing.
Remember, it is important to have a trusted bankruptcy attorney by your side as Ohio updates its bankruptcy exemptions every three years, with the next update occurring in April 2022.
If you are considering bankruptcy and not sure if Chapter 7 is right for you because of the rules of exemptions, know that you’re not alone. We are here to help. Please contact The Jones Law Firm today to schedule a free consultation. We work with families in the Columbus, Ohio area, and Franklin County.