Ohio bankruptcy laws: What are the Laws Regarding Bankruptcies in the State of Ohio
The laws about bankruptcy in the state of Ohio, in conjunction with the bankruptcy laws set by the federal court, are unique. Individuals must be aware of the rights that the state provides them with before applying for bankruptcy. Like in other states, individuals residing in Ohio are subject to either Chapter 7 or Chapter 13 of the law. The state also gives individuals the right to protect their assets – exemptions, while paying their debts
While it is possible for individuals living in most states to avail both federal and state exempts, Ohio is one of the few states that does not allow its residents to avail the federal exempts.
The state of Ohio updates its exempts every three years – the next update is due in April 2019.
Ohio’s exemption scheme
Like in every other state, an Ohio resident can avail the exemption scheme only if they have lived in Ohio for two years (730 days). If the individual has not lived in Ohio for that period, he must file and avail the exemption laws of the state that he resided in for the 180 days before the two years. This is also known as the ‘730/180 day rule’.
Ohio bankruptcy laws allow an individual to file for bankruptcy along with their spouse and double their exemptions by each claiming the full exemption amount on their property.
Exemptions include homestead, personal property (property can fall under either exemptible or non-exemptible categories), wages, pensions, public benefits such as disability assistance payment, earned income tax credit, vocational rehabilitation benefits, worker’s compensation benefits, and unemployment compensation benefits, wildcard, spousal or child support, and tools used for that individual’s trade.
Certain debts are nondischargeable regardless of whether bankruptcy is filed through Chapter 7 or Chapter 13. These include child support, alimony, debts dedicated to family support, fines and penalties accrued due to violations of the law, tax debts including income tax debts accumulated over the previous three years, student loans, and debts for causing injury or death due to negligent driving or driving under the influence.
According to Chapter 7, non-dischargeable debts will be expected to be paid even after the individual is declared bankrupt. According to Chapter 13, these debts must be cleared completely and should be included as part of the new plan.
Challenging Chapter 7 with other non-dischargeable debts
While the following list does not ordinarily fall under non-dischargeable debts, a creditor can challenge your request to discharge:
- Credit card purchases of luxury goods
- Debts for willful/malicious injury to a person or property
- Embezzlement of funds and breach of trust
- Debts owed to a divorced spouse
The Ohio bankruptcy means test
If an individual earns lower than the average family (of the same size) living in Ohio, he is exempted from the means test and can file for bankruptcy through Chapter 7. If, however, the individual earns a high income, he must complete the Ohio bankruptcy means test calculation to determine if his income can be used to pay back part of the debt through Chapter 13. All incomes will be considered.
Which is a better deal for me – Chapter 7 or Chapter 13?
This is a tricky question, and the answer will depend on several factors such as what you want to hold on to and what you are willing to let go off. Both chapters offer advantages to the debtor. In most cases, the debtor does not have a say in the matter. If you do have an opportunity to choose, we recommend you hire an attorney to go through the pros and cons of both the chapters, with you, in detail.