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It is natural to wonder what will happen to your property when you file for bankruptcy. While many worry they will lose their vehicles, furniture, or even their home to creditors when they file, the reality is that many important assets are covered by strong exemptions.
Bankruptcy exemptions in Toledo can help you shield what matters from your creditors during this process, but there are limits you must be aware of. Our dedicated bankruptcy attorneys can advise you on the exemptions that might apply to you.
A bankruptcy exemption is a provision in the law that allows a person to retain certain assets that could otherwise be sold to pay down their debts. There are exemptions that exist on both the state and federal levels, but they generally serve the same purpose. Exemptions are in place to ensure that a person filing for bankruptcy retains a basic standard of living and also has the opportunity to rebuild their lives after they receive their discharge. While most discussion of these Toledo bankruptcy exemptions relates to a person’s family home, some people are surprised at just how expansive they can be.
When you file for bankruptcy in Toledo, exemptions will largely decide what you get to keep. In Ohio, you do not have the option to rely on the exemptions in federal law, which means state exemptions are your only option. Some of the most prominent examples to be aware of include:
Ohio’s homestead exemption protects equity in the home you live in. Equity is the value of the home minus what you still owe on the mortgage. If your equity falls under the exemption limit, the trustee cannot force a sale just to pay your unsecured creditors.
If you own your home with a spouse, you may be able to double that protection. Of course, determining the value of your home may not be so straightforward. Market values fluctuate, which could mean you have less equity than you thought.
In Ohio, you can protect equity in one motor vehicle, and just like with your home, equity matters. If your car is worth $12,000 and you owe $10,000, you only have $2,000 in equity. If that amount is under the exemption limit, you can usually keep the car. This process also requires that you consider what you still owe on the car, as many people ultimately surrender their vehicle to their lender instead of trying to catch up on the payments.
The wildcard exemption gives you flexibility in that you can apply it to almost any property. Clients often use it to protect extra cash in a bank account, tax refunds, or additional equity in their home. If something does not neatly fit into another category, this exemption often fills the gap.
Ohio protects certain personal items, such as household goods, clothing, appliances, and tools you use for work. These exemptions recognize that basic belongings are not luxury assets. There are limits on the total value as well as the number of items covered in the exemption, and your attorney can help you determine what applies.
Most tax-qualified retirement accounts are fully protected. That includes 401(k)s, pensions, and many IRAs. Creditors generally cannot touch these funds in bankruptcy.
If you are considering bankruptcy, it is important to understand how exemptions might impact you. Reach out to our firm as soon as possible to discuss Toledo bankruptcy exemptions, and fill out our onilne debt calculator for additional information.
We have locations available by appointment in the following areas. Please call us to speak to an attorney and set up an initial meeting.
We are a debt relief agency helping people file bankruptcy under the United States Bankruptcy Code.
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