The moment someone sits down across from me for the first time, and often before I can even say hello, they already have one question for me: “Am I going to lose my home?” Luckily, unlike some other aspects of law, this is a fairly easy question to answer.
I’ve been practicing bankruptcy law here in Ohio for over 30 years, and after thousands of conversations and consultations, my answer is almost always the same: No. In fact, I’ve never personally had a single client lose their home, not even once.
Want to know why? It’s because most people have no idea about just how powerful Ohio’s homestead exemption really is, and that lack of knowledge could be costing them.
So, What Is a Homestead Exemption?
If someone comes into my office wondering what a homestead exemption is, I often give them the simple version: it’s a legal protection that guards the equity in your primary residence if and when you file for bankruptcy. This means that creditors and bankruptcy trustees alike can’t touch what is inside it, thereby protecting your ownership of the home.
And, even better, Ohio’s homestead exemption is considered one of the more generous ones in the country. As of 2024, it protects:
- $182,625 in home equity for an individual filer
- $365,250 in home equity for a married couple filing jointly
These protections apply whether you’re filing Chapter 7 or Chapter 13 bankruptcy in Ohio’s federal bankruptcy courts.
How the Homestead Exemption in Ohio Actually Works
The easiest way to share more information on homestead exemptions is to give real-world examples of how they work.
Example 1
Your home is worth $400,000, and you owe $250,000 on your mortgage. Work out that math, and you should have $150,000 left in equity. Under a homestead exemption in Ohio, that $150,000 is completely protected, meaning a bankruptcy trustee cannot touch it.
Example 2
Your home is worth $500,000, and you owe $200,000. That’s $300,000 in equity. Even that amount is fully protected if you and your spouse are filing jointly, since it falls under the $365,250 married couple exemption.
Those two examples should give some background on why people tend not to lose their homes, even if going through bankruptcy. The math simply works in their favor.
The Truth: 99% of People Are Already Protected
The one thing that I tell every client who walks through my door, scared of losing their home and just looking for answers, is that the vast majority of people who file for bankruptcy here in Ohio have nothing to worry about when it comes to their house. Of the thousands of cases I’ve seen and handled, I can tell you that 99% of those concerned clients don’t have the equity in their home to exceed Ohio’s exemption limits.
It’s genuinely rare.
In fact, you’d need significant equity, usually the result of high income, a paid-down mortgage, or some sort of complicated business situation, before a trustee could even begin considering going after your home. Most families who are filing bankruptcy are also dealing with issues, like credit card debt, medical bills, or job loss, but their home equity is well within the protected limits. They just don’t know it, at least not until they speak with me.
What If Your Equity Is Higher Than the Exemption?
Now, let’s talk about what happens in the rare scenario where your home equity does exceed Ohio’s limits. Even in this case, you still don’t automatically lose your home, but how the process gets handled, and the strategy behind everything, changes.
In Chapter 7 bankruptcy in Ohio, if your non-exempt equity is significant, a trustee does have the legal authority and right to sell your home, and then use those proceeds to pay off creditors. And, yes, this sounds scary, but I’ll also say that this scenario almost never happens. If it does, then the option of Chapter 13 bankruptcy is the solution.
Here’s how that works: say you have $40,000 in equity that goes above the exemption limit, plus around $80,000 in unsecured debt. Rather than causing you to lose your home, a Chapter 13 plan allows you to repay that $40,000 (the $80,000 in debt minus the $40,000 in equity) to creditors over five years, often at 40 to 50 cents on the dollar. That means you keep your house, have a manageable way to pay off your debt, and everyone is able to move forward. In other words, what could have been a crisis becomes a structured, workable plan.
Facing Foreclosure? The Homestead Exemption in Ohio Still Protects You
There’s one other thing that often trips people up when they come to me, and that is the fact that they assume that, if they are behind on mortgage payments, then the homestead exemption no longer applies. I’m here to say that simply isn’t true.
Regardless of whether you are current on your mortgage or are already in foreclosure proceedings, the homestead exemption in Ohio still protects your equity. Furthermore, Chapter 13 gives you another tool in your arsenal, namely the ability to catch up on missed mortgage payments through a court-approved repayment plan that stops the foreclosure process in its tracks.
The Misconception That’s Hurting People
Moving on, I want to address the biggest misconception I see actually hurting people, and that is that the biggest thing preventing them from getting debt relief isn’t their financial situation, it’s fear. Specifically, the rightful fear that they will lose their home. People assume that bankruptcy means surrender, like the sheriff is going to show up, kick them out, and change the locks behind them.
So, instead of filing, those people drain their retirement accounts, borrow from family members, and fall ever deeper into a hole. All to avoid something that was, more likely than not, never a risk in the first place. Understanding the rules surrounding bankruptcy, and specifically how Ohio’s homestead exemption works, can help people feel more comfortable about the proceedings, especially once they realize they’re a lot more protected than they realize.
Talk to an Ohio Bankruptcy Attorney About Ohio’s Homestead Exemption
If you are carrying debt that feels impossible to get a handle on, or if you are worried about how bankruptcy could affect your home, my best advice is to get the facts before making any sort of decision. A free 15-minute consultation is all it takes to understand exactly where you stand and what your protections are. We will take a good look at the value of your home, the equity involved, and which chapter of bankruptcy, if any, makes sense for your individual situation.
The Needleman Law Office has been helping Ohio families protect their homes and get a fresh start for over 30 years. We serve clients throughout Ohio’s Southern District, including Columbus, Newark, Lancaster, and surrounding communities. Call (614) 575-1188 today or schedule your free consultation, and know this: you don’t have to figure it out on your own, and you probably have more protection than you think.