Nearly one year ago the homestead exemption in Ohio increased to $132,900 per titled owner of the residential real estate. This was an increase from the $20,200 previously in effect. The exemption is that portion of your home’s equity you can keep from claims of creditors in bankruptcy.
Bankruptcy attorneys throughout the state braced for challenges from the creditor bar. Due to a quirky sentence in an uncodified portion of the law, there was immediate question as to whether this new protection applied to bills your incurred prior to the effective date of the law. It did not take long for the attorneys for the collection agencies to pounce. Judge Kay Woods was first to rule on the issue, applying the new Ohio homestead exemption to all debts in a bankruptcy even if they were incurred prior to the effective date of the law and the subsequent cost of living adjustment.
That ruling seemed to quiet things down on this issue, but things were heating up in Canton from a very unlikely source. The chapter 13 trustee challenged the law based on the issues presented in Ashtabula with a new twist. We should have seen this one coming since he represents the unsecured creditors in chapter 13 cases. He loaded his cannon with the Ohio constitution for his attack.
When I was a young lawyer a wonderful judge named Joseph Cirigliano taught me taught me that many times the answer I need is in the Ohio constitution. This trustee must have known Joe.
This Chapter 13 Trustee argued the state constitution says the new Ohio homestead exemption could not be applied to debts that arose before its effective date because substantive law must be applied prospectively (going forward). Judge Kendig presented a lengthy analysis of remedial versus substantive law. To put this in English, remedial laws apply going both backward and forward in time. Judge Kendig found “the Current Homestead is remedial in nature and can be constitutionally applied in cases filed after the Effective date, even to claims accruing before the effective date.” This attack on your home equity has been soundly deflected.
This judge also concurred with the findings of Judge Kay Woods as to the other challenges the Canton Chapter 13 Trusted made to the new Ohio Homestead Objection. If you ever wondered about the roots of exemption law top to bottom, Judge Kendig’s opinion is an excellent place to begin (and maybe end).
Currently the score stands at Creditors 0 and Ohio citizens 2. The Southern District of Ohio in Columbus has yet to weigh in. My understanding from the NACBA state chair is that there is a consolidated case still pending there.