What Can I Keep if I File Chapter 7 Bankruptcy in Franklin County, Ohio?
Chapter 7 bankruptcy, the most frequently filed form of bankruptcy by individuals in the United States, essentially serves as a tool for debt cancellation. When an individual's income is inadequate to meet obligations to creditors, Chapter 7 bankruptcy offers a path for discharging these debts, thereby providing a fresh financial start. However, a common apprehension for those contemplating this option is the potential loss of personal assets. This article outlines what an individual can retain when filing for Chapter 7 bankruptcy in Franklin County, Ohio.
A critical element of Chapter 7 bankruptcy is the potential liquidation of assets to repay creditors. However, it's crucial to note that not all assets are subject to this process. The bankruptcy code encompasses specific exemptions that shield certain assets from liquidation up to a stipulated dollar amount. These exemptions can cover the entire value of an asset.
The following are some of the prevalent exemptions available under Ohio state law and federal law:
1. Homestead Exemption: This exemption safeguards an individual's home, protecting up to $161,375 of equity. This exemption amount can be doubled for property that is owned jointly.
2. Vehicle Exemption: This exemption protects one motor vehicle up to $4,450.00.
3. Personal Cash and Household Items Exemption: Personal cash, either on-hand or in a bank, up to $550 is protected. Household items, such as furniture or appliances, are also protected up to $14,875. Additionally, up to $1,875 of value in jewelry is covered.
4. Retirement Funds Exemption: Retirement plans, including 401(k), 457, IRA, or similar programs, are 100% protected under this exemption.
5. Wild Card Exemption: Ohio law allows for the protection of $1,475 for any property, excluding real estate. This exemption can protect assets not covered by other exemptions or added to another exemption.
It's important to note that tax refunds are not exempt and can be included in an individual's bankruptcy estate. However, depending on the timing of the bankruptcy filing, an individual may be able to retain part or all of their tax refund.
Secured debts, which include home and auto loans, can often be discharged in Chapter 7 bankruptcy. However, if an individual wishes to retain their home and car, they must continue making payments. Depending on an individual's circumstances, they may only want to keep their car if the outstanding loan amount is within its value.
If an individual is considering bankruptcy and is concerned about how it will affect their personal belongings, it's advisable to consult an experienced bankruptcy attorney at Wood & Brewer. We can guide the individual through the process and help develop a strategy to retain as many assets as possible.