Ohio Bankruptcy Law: What Happens to Your Home if You Have a Mortgage?
Bankruptcy can be a daunting process, especially for homeowners in Ohio who are worried about the fate of their property. Understanding Ohio bankruptcy law and its implications for your mortgage can help you navigate this challenging situation.
When you file for bankruptcy in Ohio, you typically have two options: Chapter 7 or Chapter 13 bankruptcy. Each type of bankruptcy has different rules that affect your home and mortgage.
Chapter 7 Bankruptcy
In Chapter 7 bankruptcy, also known as liquidation bankruptcy, your non-exempt assets might be sold to pay your creditors. However, Ohio has homestead exemptions that protect a portion of your home’s equity. As of the latest updates, this exemption allows you to protect up to $147,000 of equity in your primary residence for married couples filing jointly, and $73,350 for single filers. If your home equity is less than these limits, you may be able to keep your home.
If you have a mortgage, you'll need to continue making payments on your home after filing for Chapter 7 bankruptcy. If you fail to keep up with these payments, the lender may initiate foreclosure procedures.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, often called reorganization bankruptcy, allows you to create a repayment plan to pay back your debts over three to five years. This type of bankruptcy can be particularly advantageous for homeowners because it helps to prevent foreclosure. It allows you to catch up on missed mortgage payments and simultaneously keep your home.
The court will approve a repayment plan that includes your mortgage arrears, and as long as you continue to make your regular mortgage payments and stay current with the repayment plan, you can keep your home throughout the bankruptcy process.
What You Should Do
1. Consult a Bankruptcy Attorney: It’s crucial to speak with an attorney who specializes in bankruptcy law to understand your specific situation and the best options available for you.
2. Stay Current on Mortgage Payments: Whether you choose Chapter 7 or Chapter 13, ensuring that you are up-to-date on your mortgage payments is vital to protecting your home.
3. Consider Mortgage Modifications: Sometimes, lenders may be willing to work with you on modifying your mortgage, lowering your monthly payments, or even granting forbearance.
In conclusion, while filing for bankruptcy can feel overwhelming, knowing your rights under Ohio bankruptcy law can help you make informed decisions about your home and financial future. Remember to seek legal counsel to ensure the best outcome for your unique situation.