Which of your assets are exempt in bankruptcy?
June 13th, 2016
When meeting potential clients for the first time, one of their biggest concerns is whether they will lose their home, car, retirement or other assets that they have if they file for bankruptcy. In most situations, those that currently reside in Ohio and have resided in Ohio for the last two years will have the assets that they are most concerned about protected in bankruptcy through the exemptions provided under state law. For example, a single homeowner can claim up to $136,925.00 in equity in their home as exempt in bankruptcy. This means that a bankruptcy filer’s home must be worth $136,925.00 more than the payoff of the mortgage to have any risk of losing the home to the bankruptcy estate. If two spouses are filing bankruptcy together and they both own the house, the exemption doubles to $273,850.00! As a result, in all but the rarest of cases, homeowners that file bankruptcy have nearly no risk in losing their home when they file bankruptcy.
Additionally, retirement accounts that are tax-exempt or tax-deferred (i.e. 401(k)s, 403(b)s, pensions, IRAs, etc.) are completely exempt in bankruptcy. There is no limit to how much you can have in your retirement account when you file for bankruptcy. However, the timing of the funding of the retirement can come into question. You normally can’t dump a significant amount of money into your retirement on the eve of a bankruptcy filing and have it be considered exempt in bankruptcy.
There are also exemptions available for motor vehicles, household goods, jewelry, some forms of tax refunds, personal injury claims, cash on hand, and so on. The selection of exemptions for your assets in bankruptcy can be a complicated route to navigate. Where you lived in the two years prior to the bankruptcy filing can impact which exemptions you are able to claim. Be sure to choose an attorney that knows with confidence the exemptions that should be claimed for your assets. Your ability to retain these assets in bankruptcy may depend on it!