Piqua, Ohio Bankruptcy Attorney: The Ohio homestead exemption

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Some people worry that filing for bankruptcy means that they will lose everything that they own, including their homes. In Ohio, certain types of property are exempt from inclusion in the bankruptcy estate. Among those exemptions is the state’s homestead exemption, which allows debtors to exclude up to $132,900 of their principal residence’s equity.

What the homestead exemption means

If you have less than $132,900 in equity in your home, the bankruptcy trustee may not sell your home in order to repay your creditors. This means that your home will be safe in bankruptcy. If you have more equity in your home than $132,900, it doesn’t mean that you will necessarily lose your home in bankruptcy. If you file for Chapter 7 bankruptcy protection and have slightly more equity in your home than the exemption amount, you may be allowed to pay the difference to the trustee in order to keep your home. If you have substantially more in equity in your home, you might want to instead consider filing for protection under Chapter 13. Your Piqua, Ohio bankruptcy attorney may advise you about the chapter that is more appropriate for your particular financial circumstances.

Spouses and the homestead exemption amount

Spouses who file for bankruptcy and who both own their home may double their homestead exemption amount. This means that you and your spouse could exempt up to $265,800 of your home’s equity if you file a joint bankruptcy petition.

Understanding the dower interest rule

Under Ohio Revised Code § 2103, a non-owning spouse has a dower interest in the property of one-third of its value. This means that when one spouse owns a home and doesn’t transfer the title to add his or her spouse and then later files for bankruptcy, his or her spouse may claim up to the amount of his or her dower interest in the home.

For example, if a woman owns a home that is worth $300,000 and holds equity of $200,000 in the home, the woman may claim the Ohio homestead exemption amount of $132,900. Her non-owning spouse who files jointly may claim up to one-third of the home’s value. In this case, his exemption would be $100,000. While he wouldn’t be able to claim the full $132,900, his dower interest in the property combined with her homestead exemption amount would still protect their home in a joint petition.

The Ohio homestead exemption is meant to protect people who file for bankruptcy from losing their homes. To learn more about protecting your home in bankruptcy, contact the Chris Wesner Law Office, LLC to schedule your consultation.

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