The Basics of Chapter 7

In a Chapter 7 bankruptcy, most of the debtor’s debts are discharged, including unsecured debt, and the debtor allows his assets to become temporarily controlled by the bankruptcy court. Collectively called a bankruptcy estate, these assets are either considered nonexempt or exempt. The debtor is allowed to keep his exempt property, and the bankruptcy trustee can sell the nonexempt property to help pay the creditors listed in the case.

Chapter 7 Filings in Delaware, Ohio

Although the federal bankruptcy code is generally the same throughout the United States, Ohio also has bankruptcy only exemptions that are designed to protect the debtor’s assets; federal exemptions are not applicable in Ohio. With bankruptcy only exemptions, the debtor can only use the exemptions in a bankruptcy filing.

Homestead Exemptions

Under the homestead exemptions in Ohio, a maximum of $21,625 in equity of the debtor’s primary residence is exempt. A married couple who files jointly is eligible for twice as much as the aforementioned exemption limit. For example, a home that is underwater by $100,000 does not have any equity for the trustee to seek in a Chapter 7 bankruptcy since the homestead exemption takes into account the equity instead of the debt.
Automobile Exemptions

Bankruptcy law in Ohio also exempts no more than $3,450 of equity in the debtor’s automobile. For instance, if the debtor owes $5,000 on a car with a value of $6,500, the car in question is exempt. However, if the debtor fully owns the car, the car is considered nonexempt.

Retirement Account Exemptions

The exemptions in Ohio’s bankruptcy laws even covers retirement accounts. These exemptions apply to retirement accounts such as pensions, IRAs and 401Ks. Therefore, most people find that all of the funds they earmarked for retirement are protected.

Retaining Property During a Bankruptcy

Usually, Ohio bankruptcy law’s exemptions allow the debtor to keep the majority of his assets, depending on the property’s value. In some cases, he will retain all of his property. Many debtors find that their primary residence falls under the exemption threshold.

Although assets are sometimes liquidated in a Chapter 7 bankruptcy, the trustee wants to avoid the expense, effort and time it takes to sell the debtor’s property. Instead of going through an auction, a cash payment may be an option that a bankruptcy attorney can negotiate on behalf of the debtor.

Attorney Fees
Usually, the approximate cost of filing chapter 7 ranges from $900 to $1500. The total cost depends on the case’s complexity and other factors. The debtor must also pay $335 in filing fees, but these fees can be paid in installments or completely waived if the debtor can prove he is experiencing a severe financial hardship. The attorney may also offer some of his clients a payment plan to make the fees more manageable to pay.