Your Assets in A Bankruptcy and Exemptions to Protect Them
Filing for bankruptcy can relieve financial burdens, but it can also place a person's assets at risk for seizure. Whether an individual is filing Chapter 7 or Chapter 13, certain exemptions are allowed under the law. These exemptions can prevent specific assets from being seized and liquidated, to pay off debts.
Understanding the Bankruptcy Process
When an individual petitions for bankruptcy, there are two main options available: Chapter 7 is sometimes referred to as the liquidation bankruptcy and Chapter 13 is a reorganization and repayment plan.
Prior to filing a bankruptcy case, a debtor is required to provide a thorough financial inventory, which includes detailed information on all assets and debts.
Upon filing the bankruptcy petition, a bankruptcy estate is created. All the assets owned by the debtor fall under this estate.
What Are Exemptions?
An exemption is a protection from the Bankruptcy Code that will allow debtors to keep certain assets in Chapter 7 case and will help determine how much a debtor will repay in a Chapter 13 case.
The following offers a general list of the bankruptcy exemptions that are permitted in Ohio:
* Homestead Exemption (protects equity in a residence) = $145,425.00
* Personal vehicle = $4,000.00
* Cash on Hand/In a Bank Account = $500.00
* Household goods/clothing (Maximum value of $625.00 per item) = $13,400.00
* Jewelry = $1,700.00
* Retirement plans = No limits
* Life insurance policies (Spouse or children must be beneficiaries) = No limits
* Worker's compensation benefits
* Wildcard = $1,325.00
According to state exemption laws, the value of an asset is determined by its current worth. Debtors should work to ensure their rights are protected concerning exemptions.
Who Is the Trustee?
No matter which bankruptcy type a client chooses, a third-party trustee is appointed to administer/oversee the case.
Chapter 7 trustees must liquidate any non-exempt property in the bankruptcy estate. The proceeds from the sale are dispersed among the creditors. A Chapter 13 trustee holds the responsibility of administering a Chapter 13 debtor’s repayment plan. The trustee must collect and monitor the debtor's payments as they progress through the plan.
How Can a Bankruptcy Lawyer Help?
Although not required, debtors have the option of hiring a lawyer to assist them through the bankruptcy process. When someone is contemplating bankruptcy, they need to be aware of which type will be best for their needs and how they can protect their hard-earned assets.
The best way to make an appropriate choice is by receiving guidance from a lawyer. Scheduling a consultation allows individuals to get the assistance they need. Our team at Wood & Brewer has the knowledge to help you through the bankruptcy process. We offer a free consultation, so we invite you to contact us today.