Posts made in December, 2013

Changes to Ohio exemption law allows people to retain more of their assets

Posted by on Dec 3, 2013 in Uncategorized | Comments Off on Changes to Ohio exemption law allows people to retain more of their assets

Changes to Ohio exemption law allows people to retain more of their assets

SHERRY KARABIN Legal News Reporter Published: November 22, 2013 Every state has a set of exemption laws intended to prevent creditors from pushing debtors and their families into financial peril. Many studies suggest that liberal exemption laws that protect debtors have a positive impact on entrepreneurship within the state since owners of small businesses may be less likely to start high-risk ventures if the punishment for failure is too great. In recent years, exemption laws in a number of states, including Ohio, seem to be following that philosophy, allowing debtors to retain more of their assets when filing Chapter 7 and 13 cases. “Exemption laws preserve basic items of property from seizure by creditors, so that debtors can to continue to work productively and support themselves and their families,” said Robert S. Thomas II, a partner and Akron bankruptcy attorney at Thomas, Trattner & Malone, who specializes in bankruptcy and commercial law. “These laws are intended to protect at least basic wages and essential property from seizure by creditors. “Federal bankruptcy exemption law is pretty generous but 35 states have their own exemption laws,” said Thomas. “Massachusetts and Iowa have the most expansive laws but Ohio is becoming a much more debtor friendly state, which in theory should encourage more people to take a chance and start a business here.” That was not always the case. In Ohio, for example, Thomas said no major changes had occurred for over 20 years in the exemption statute until 2008. That year lawmakers enacted Amended Ohio Senate Bill 281, which took effect on Sept. 30, 2008. The amended provisions of Ohio Revised Code section 2329.66(A) raised the homestead exemption for residential property, including a mobile home, from $5,000 to $20,200 per debtor on one item or $40,400 for a husband and wife together, provided they were both on the title and occupying the property on the date of the filing. Other exemptions went up as well, but those increases are nothing compared to this year’s changes in Ohio, which raised homestead exemptions to $132,900 per individual or $265,800 for a husband and wife. “What this means is that if a husband and wife own a home without a mortgage that is not worth more than the $265,800 exemption they receive together, they may be able to fully exempt their home without a problem, meaning they can likely keep it,” said Thomas. “Attorneys need to be updated on current case law and trends in exemptions and objections to exemptions.” The other big changes that took place from 2008 to 2013 in the exemption statute are a 100 percent exemption for child tax credits, earned income tax credits, college savings plans/529 plans and inherited IRAs. In addition, increases to household item exemptions have gone from $10,775 in 2008 to $12,250 in total or from $525 to $575 per item. In the case of motor vehicles, the exemption increased in 2008 from $1,000 to $3,225 and is presently at $3,675. “This exemption is not in the aggregate and can only be used on one vehicle,” said Thomas, a leading bankruptcy lawyer Akron, Ohio. “A husband and wife who are both listed as owners on the title for a motor vehicle could each apply their exemption to the same motor vehicle. “I believe lawmakers are not only trying to make Ohio a more friendly place to do business, I think they want to give debtors a chance at having a fresh start by allowing them to keep more of their basic necessities like their home, car and household goods.” Thomas said some people who might not...

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