Bankruptcy in Ohio, Part 4
Ohio does not allow federal bankruptcy exemptions
Continued from Bankruptcy in Ohio, Part 3.
State versus federal exemptions
Although bankruptcy is administered by federal law, the bankruptcy code (the Code) allows states to opt out of federal bankruptcy exemptions and to provide their own exemptions. These exemptions are what debtors claim in order to protect certain assets necessary to their ongoing lives and effort to start over. Exemptions include such obvious items as a home, an automotive vehicle, household possessions and tools but also include such assets as insurance policies, retirement accounts, child support and jury awards.
15 states and Washington, D.C. allow claimants access to federal exemptions
Ohio is not on the list; heres the states that allow residents to claim federal exemptions instead of only state exemptions (Please notice: even in the following states, residents cant mix-and-match, that is, they must choose one or the other):
States allowing federal exemptions
- Washington, D.C.
- New Jersey
- New Mexico
- Rhode Island
- South Carolina
- Washington, and
Why do I list the states that allow federal exemptions?
Living in Ohio, you may rightly wonder: What do I care about federal exemptions if Im not allowed to claim them because of Ohio state law?
First, you may be in a position to hold off. You may be in a position to move to a new state for a job. Perhaps you move for the job and it turns out the new state has better exemptions, or it allows claiming federal exemptions. Typically, youll need to be in the new state for several months to a couple of years.
Planning versus dodging
In short, theres nothing wrong with planning the timing of your bankruptcy case, as long all actions are taken in good faith and theres no attempt to hide assets or temporarily transfer title to assets to family members with them giving back the assets after your discharge from bankruptcy. Bottom line: in most cases, you cant move then right away file bankruptcy merely to dodge Ohio exemptions law.
The court takes a dim view of anyone who seems to be dodging the requirements.
Dont risk dismissal or fraud charges
Remember, your access to bankruptcy protection is not guaranteed. That is, yes, anyone can file for bankruptcy protection, regardless of income, from those living in poverty to those with millions in assets. However, everyone is subject to the means test (Chapter 7) or proof of assets versus liabilities and the income necessary to service a reorg/repayment plan (Chapters 13 and 11).
However, your case can be dismissed outright, leaving you exposed to all creditors. Or, worse, you can wind up facing charges of bankruptcy fraud, which can result in fines and even jail time.
These are all reasons for seeking counsel from an attorney experienced with Ohio bankruptcy courts and trained in both federal bankruptcy law as well as Ohio exemptions.
Next: Bankruptcy in Ohio, Part 5Chapter 13 benefits over Chapter 7.
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