The Ohio homestead exemption will increase to $125,000.00 in a law signed by Governor Kasich December 20, 2012. Ohio has entered the 21st century with a sweeping effort to grow jobs and businesses by encouraging investment in the state.
An exemption is that portion of an asset that is not subject claims by creditors. Presently Ohio’s homestead exemption is $21,625.00. That means for an individual, if there is more equity in the residence than that, and he needs to file bankruptcy, he will either lose the home, or have to file for chapter 13 protection. If the property is owned jointly by husband and wife, the homestead exemption is double or $43,250.00.
In Ohio laws do not take effect until 90 days after the governor signs them. This law is expected to be effective around March 27, 2013.
What Impact Does This Have on Bankruptcy Clients?
- You can file chapter 7 if home equity is up to $125,000 if you are the only titled owner.
- You can exempt $250,000 of home equity in chapter 7 if the deed is titled in both you and your spouse.
- The death of judicial liens in Ohio when you file bankruptcy.
You Will Be Able to File Chapter 7 and Keep a More Valuable Home
The exemption applies to the equity value of your residence real estate. That means you add the exemption amounts to your mortgage balances. If you have no mortgage, you will be able to file bankruptcy and keep your home so long as the value does not materially exceed the new exemption levels.
This will be a great help to the debtors chapter 13 trustees term as “house rich and cash poor.” This scenario happens when the only option for a debtor is to file for chapter 13 because they are often older, widowed, and retired with a home of modest value over $21,625.00. Without a chapter 13 they would lose their home. Now chapter 7 will be a real choice.
Most Judicial Liens are Going Away
In bankruptcy court it has always been possible to avoid a judicial lien to the extent that it impairs the homestead exemption. In Ohio that is a fairly small window. After March, 2013 just about any judicial lien will be subject to a motion to void it in bankruptcy court. The $125,000 to $250,000 homestead exemption seriously widens the playing field to file bankruptcy have judgment liens from your property. The new law, however, redefines a state tax lien as statutory, and not judicial. State tax liens will stay.
The bottom line is that this law will encourage investment in Ohio. People who come here to build business do not have to fear forfeiting their residence if the investment turns sour. For the rest of us it will now be possible to eliminate credit card debt and not have to worry about losing a home we have been careful to pay for faithfully.
It is now past the effective date of the new Ohio Homestead exemption. a very curious thing happened. the exemption was $125,000 for 4 whole days. On 4/1/13 the bi-annual cost of living adjustment was applied to the exemption statute. Ohio homestead exemptions increased another $7,900. It is now $132,900.