Financial distress can seem like the end of the world. Thanks to a protection offered by federal law, it doesn't have to be. That protection is bankruptcy. For individuals, there are two main types. Chapter 7 is the more traditional type that most people think of when they hear the word "bankruptcy" It involves a sale, or liquidation, of assets to repay creditors as much as possible. The remaining debts are wiped clean. Chapter 13, on the other hand, reorganizes debts into a repayment plan over a set period of time.
Even though bankruptcy is part of federal law, each state has its own rules. Ohio residents who are considering filing Chapter 7 or Chapter 13 should be aware of certain considerations pertaining to that state.
Bankruptcy Filing Location
Ohio has two districts for bankruptcy court:
- The Northern District, with locations in Toledo, Cleveland, Youngstown, Akron, and Canton
- The Southern District, with locations in Cincinnati, Columbus, and Dayton
You must file in the district in which you live.
Chapter 7 Eligibility
Chapter 7 may seem like an attractive bankruptcy option, but it is not for everyone. Whether or not you are a candidate for Chapter 7 bankruptcy depends on your income. Your average monthly income must be below Ohio's median income. If you make more than the median income in Ohio, you may still qualify, but only if you are able to pass a stringent means test.
Chapter 13 Plan Duration
The length of a Chapter 13 bankruptcy plan also depends on your income. Those who make less than Ohio's median monthly income can expect their repayment plans to last no more than 36 months, unless there is good cause for an extension. In the event an extension is granted, the maximum duration is typically 60 months. For those who make more than Ohio's median income, a repayment plan generally will last 60 months.
Bankruptcy Exemptions in Ohio
If you are considering filing bankruptcy, you may be wondering what property you get to keep. Each state maintains a list of exemptions-property that is off-limits during the liquidation phase of Chapter 7. Exemptions are also a factor in setting the terms of a Chapter 13 repayment plan. Some states allow you to choose between the state or federal list, but in Ohio, there is no such choice; you must stick to Ohio's list of exemptions, which includes:
- Real or personal property used as a residence—equity valued up to $21,625
- Motor vehicle valued up to $3,450
- Minimum of 75 percent of disposable income or 40 times the federal minimum wage, whichever is higher
- Household and personal items, including clothing, appliances, furniture, jewelry, bedding and more
A Personal Bankruptcy Lawyer Can Help
For legal information and advice regarding your potential bankruptcy case, please contact an Ohio bankruptcy lawyer.