Can I File Bankruptcy and Keep My House and Car?
Filing for bankruptcy can provide significant relief for overwhelming financial challenges. While the process involves some compromises, it can also inspire hope when dealing with burdensome debt. However, the process can be complicated and confusing, leaving people with serious questions. For example, if you file for bankruptcy, can you keep your house?
The answer depends on the type of bankruptcy you file. Understanding how bankruptcy works, its different forms, and what possessions you can maintain can help you feel more empowered to make the right choices for your financial future.
Ohio Bankruptcy Exemptions: What Can I Keep?
Ohio has laws governing what individuals are allowed to keep when filing for bankruptcy. From February 2023 to March 2025, the Chapter 7 bankruptcy exemptions in Ohio are as follows:
- Home equity – Up to $161,375
- Automobile – Up to $4,450
- Cash – Up to $550
- Household goods – Up to $700 for any given item, up to a combined total of $14,875 (exemptions do not apply to individual items worth more than $700)
- Jewelry – Up to $1,875 total
- Work property – Up to $2,825 (e.g., business implements, work tools)
- Personal injury settlements – Up to $27,950 for bodily injury
- Wildcard – $1,475 of anything you choose, either on top of other exemptions or to cover an item Ohio’s exemptions do not cover
Furthermore, you can keep the total amount of equity in items such as
- Life insurance
- Burial plot
- Workers’ compensation benefits
- Unemployment benefits
- Retirement plan
Secured vs. Unsecured Debts
When filing for bankruptcy, keep in mind that the process aims to discharge primarily unsecured debt, such as credit cards and other loans that do not give the lender the option of confiscating your assets. Bankruptcy discharge does not usually extend to debts to secured lenders, such as car and home loans. You still have an obligation to pay these debts unless you give up the property serving as collateral on these loans. Maintaining ownership of your house and car under bankruptcy is contingent on your ability to continue making payments on your secured loans.
State vs Federal Law: Which Applies in Ohio?
In addition to state exemptions, federal law also has bankruptcy exemptions. While many states allow residents to choose which exemptions apply to them, Ohio residents must follow the state’s provisions.
Keeping Your House and Car in Chapter 7 Bankruptcy
Can you file for bankruptcy and keep your house and car? That partially depends on whether you file Chapter 7 or Chapter 13 bankruptcy.
Chapter 7 bankruptcy is a form of liquidation that eliminates the greatest possible amount of unsecured debt. Under Chapter 7, you can keep the state-approved exemption amounts in your house and car if you are up to date with your mortgage and car loan payments. Your car loan lender may require you to reaffirm your debt by signing a new agreement. However, if you fall behind on your mortgage payments, you risk losing your home.
Keeping Your House and Car in Chapter 13 Bankruptcy
Chapter 13 is the other form of bankruptcy available to individuals. Under this structure, a person who has a regular income stream can make a plan to pay back their debts in part or in full over a three-to-five-year period. Those who have filed for Chapter 13 bankruptcy often have a grace period to get current with mortgage and car payments. If the courts agree to the plan, you will have a chance at keeping your home and vehicle as long as you keep your agreed-upon payments up-to-date.
Your other option for keeping your vehicle under Chapter 13 is “the cramdown.” This strategy allows you to reduce your debt to the current value of the car. You will then make repayments over the course of your bankruptcy term.
Bankruptcy When You’re Behind on Mortgage Payments
If you have fallen behind on your mortgage payments, bankruptcy may still be an option to avoid foreclosure and keep your home. However, you must take quick action and be proactive throughout the process.
If you file for Chapter 7, it will trigger an automatic stay on any foreclosure proceedings. This pause gives you time to make arrangements with your lender.
You have several options to become current on your mortgage during Chapter 7 bankruptcy:
- Cure the default – Make lump sum payments to bring your mortgage current.
- Set up a repayment plan – Work with your lender to repay the missed payments over time.
- Modify the loan – Negotiate with the lender to add missed payments to the end of the loan.
- Sell the home and pay off the mortgage – Bankruptcy trustees may force a sale if you cannot cure the default. You could then use the proceeds to satisfy the mortgage debt.
- Surrender the home – If you cannot catch up on payments and want to avoid foreclosure, surrendering the property to the lender is an option.
If you file for Chapter 13 bankruptcy instead, your repayment plan payments would be distributed to bring the mortgage out of default over several months. You also have the option to renegotiate the mortgage terms with the lender if they agree to do so.
No matter which type of bankruptcy you file, communication with your lender is vital. Be proactive in negotiating repayment terms or loan modifications. Provide frequent status updates and financial information as required. Bankruptcy can effectively save your home from foreclosure, but active participation is crucial for success. Consult with a qualified bankruptcy attorney to fully understand your options.
Contact the Ohio Bankruptcy Attorneys at Amourgis & Associates, Attorneys at Law
With proper planning and expedient action, many homeowners in arrears can file for bankruptcy and keep their most valuable asset. The Ohio bankruptcy lawyers at Amourgis & Associates, Attorneys at Law, have the experience and skills to fight for what matters most to you. We have offices throughout the state and are ready to help you during this difficult time. Contact us today for a free, confidential, no-obligation consultation to learn more about how we can help you.
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At Amourgis & Associates, Attorneys at Law, we only represent consumers. We fight for regular people who have been seriously hurt in accidents. We fight for people who are being crushed by overwhelming debt and need a fresh start. We fight for individuals and families. Never businesses. Never insurance companies. We are loyal to the consumer.
