Can I keep my house in Ohio and file for bankruptcy? Home ownership has always been a large part of the American dream. So, what happens once you’ve achieved this dream and then have financial difficulty affecting your ability to pay your home mortgage? In the vast majority of cases in Ohio you keep your home despite filing for bankruptcy.
Chapter 7 Bankruptcy – Can I Keep My Home?
Chapter 7, or straight bankruptcy, is designed to discharge your unsecured debts. Ohio has a large “homestead exemption”. In Ohio, so long as equity in your home equity does not exceed this exemption the bankruptcy court cannot liquidate your home.
The Ohio Homestead Exemption as of 2024 is: $161,375 per individual or $322,750 per couple. These equity amounts are untouchable by the bankruptcy court in Ohio.
If you file Chapter 7 in Ohio you should be current on your house payments or nearly so. So long as you are current and do not have equity beyond the above exemption amounts you will be able to keep your home should wish.
You will typically sign a reaffirmation agreement with your mortgage company. This agreement makes your mortgage non- discharged in the bankruptcy. You continue to make your mortgage payments in the same amount and time as before.
We have found with many of our clients that once their unsecured debts (credit cards, medical bills, signature loan payments, etc.) have been discharged in their Chapter 7 bankruptcy, they then have the budgetary room to stay current or get caught up on a missed payment or two.
Although this is less common in Ohio now given recent years of rapid appreciation in home values, you may surrender your home back to the bank and discharge the mortgage debt if that benefits you the most. We can discuss this option with you at your initial consultation.
Chapter 13 Bankruptcy and Your Home
If you have equity above the homestead exemption in Ohio, and you are delinquent on mortgage payments, you can still save your home through a chapter 13.
A chapter 13 bankruptcy involves a repayment plan including your home mortgage arrearage. For example, if your home is in foreclosure in Ohio you can file Chapter 13 up to the moment the sheriff auctions your home off to the highest bidder. Your chapter 13 filing in Ohio stops all foreclosure proceedings.
Based on current Ohio and Federal law, we can front load your repayment plan to catch up your mortgage arrearage first and make unsecured creditors wait to receive their payment which is usually pennies on the dollar.
This repayment plan typically frees up our client’s budgets and relieves the financial strain and stress caused by continued falling behind. The goal with our Chapter 13 clients is to save secured property such as homes and vehicles, while reducing their overall budgetary outlay, buy consolidating payments into one lesser total payment.
Your house payment, arrearage, vehicles and all other debts are typically covered by one payment to the Cincinnati, OH or Dayton, OH Chapter 13 Trustee. The Cincinnati or Dayton Trustee then pays your creditors and the Bankruptcy Court and Code protects you from all collection activity during the meantime.
