Unfortunately, the threat of losing one’s home due to economic difficulties caused by medical bills, unemployment or other unpaid bills is something that many Ohioans have faced in the past few years. Prior to March 27, 2013, the “homestead exemption” in Ohio was only $21,625 per debtor. This meant that when facing bankruptcy, a couple could lose their home (something that many work their entire lives to own outright) if the equity in their home was more than $43,250.
However, Ohio’s homestead exemption was recently expanded to $132,900 per individual from the $21,625 exemption Ohio previously recognized, subject to certain exceptions. A married couple can now claim up to $265,800 in exempt homestead equity to avoid having their home sold to satisfy judgment creditors. For example, assume a married couple owns a home in Columbus worth $500,000 and has a mortgage lien on the property for $350,000. This couple also owes a judgment creditor $500,000. Since the home equity ($150,000) is less than the homestead exemption for a married couple ($265,800), this couple could file for Chapter 7 Bankruptcy AND keep their home while ridding themselves of all unsecured debts.
While a lot of attention has been paid to the drastic changes that occurred in Ohio law earlier this year with respect to creditor protection through self settled legacy trusts, for an overwhelming majority of Ohioans the bigger and more important change was to the homestead exemption. When going through tough economic times, Ohioans can now rejoice that the one constant that will see them through is their beloved home.
“We shape our dwellings, and afterwards our dwellings shape us.” ~ Winston Churchill