Last June we reported in our blog that the Ohio legislature increased the homestead exemption amount from $21,625 to $132,900. This significant increase is important because it offers more homeowners that file for Chapter 7 bankruptcy the opportunity to keep their homes. Simply put, homestead exemption is the amount of equity protected in your home during the bankruptcy process. However, not everyone is happy with this increase.
Creditors Opposed to Increase
An increase in homestead exemption means a larger portion of your home is protected from creditors. Obviously, creditors are not thrilled. The Ohio Creditors Bar Association was quick to question whether the new exemption protection applies to debts incurred before the effective date of the new legislation. The answer is uncodified, which means it’s not specifically answered in the law. Instead, a judge must look at legal precedents and hear arguments from experts to make a final decision. In this case, that’s what happened and a judge ruled that the new homestead exemption amount applies to all debts in the bankruptcy, even those incurred before the law’s effective date.
Not long after the above mentioned judge ruled, a Chapter 13 Trustee, representing unsecured creditors, challenged the law. The Trustee claimed the legislation is a substantive law, meaning it only applies going forward. However, Judge Kendig in Canton squashed this argument, explaining why the homestead exemption legislation is a remedial law, meaning it applies going backward and forward.
Hopefully, the controversy will die down now that two judges have ruled. However, it illustrates just how tumultuous bankruptcy law can be. Having a Dayton, Ohio bankruptcy attorney that stays current with updates to the law, as well as potential stumbling blocks, is imperative to finding a bankruptcy solution that works for you. Trust the Chris Wesner Law Office with your bankruptcy. Contact us for a free consultation.