Ohio homestead exemption grew 500% to $125,000 when Governor Kasich singed a job and business bill December 20, 2012. The homestead exemption is an Ohio law that protects the equity in your home from creditors and bill collectors. Lawmakers realized Ohio’s very low exemption was a major factor in entrepreneurs avoiding Ohio for their business idea development.
This new protection won’t be available until around March 27, 2013. You don’t need to wait until then to be ready to take advantage of it.
Let me explain how exemptions work first. Each Ohio exemption works on a per person basis. That means if an asset, like a home, is owned jointly the exemption is double. That means a husband and wife who own the house jointly will enjoy a total homestead exemption of $250,000. Same goes for any other asset.
Until March 20, 2013 the Ohio homestead exemption is $21,625 per person on the title. This poses a real problem for many older people in Lorain and Cuyahoga County. Normally they have a paid-off home of modest value, usually around $65,000. They want to file bankruptcy to eliminate their credit card debt, or to stop bill collector abuse. Everyone needs a place to call home. All they want is to eliminate debt they can never hope to pay, and keep their home.
Ohio law as it is now requires them to risk losing the home if they file bankruptcy. For a $65,000 jointly owned, paid off house there is $21,750 in non-exempt, or unprotected equity. The chapter 7 trustee would be bound by law to sell the home, pay the persons their $43,250 exemption and then disburse the rest to creditors. That is not an acceptable result for anyone. For many retired people the low exemption keeps them at the mercy of bill collectors, because they will not risk the roof over their heads.
Now is the time to get ready to take advantage of the new Ohio homestead exemption law. Few regular homes in Northern Ohio have value exceeding $125,000 or $250,000 if jointly owned with a spouse. If you have been putting off filing bankruptcy because your home equity is worth more than $21,625 or $43,250. Now is the time to reach out for peace of mind.
By acting now to get ready to file bankruptcy you can jump on the new Ohio homestead exemption as soon as it becomes law. Call me for a bankruptcy consultation. You can use your income tax refund to pay for your bankruptcy. About 105 days after the law goes into effect you can be debt free and you will be safe in your home. If you call before the law goes into effect March 27, 2013, I will even reduce my base chapter 7 attorney fee to $1,000 for Cleveland and Akron filings when you mention this blog post at the consultation (even if you don’t need the higher homestead exemption).