Bankruptcy exemptions protect the equity in your property from creditors and the bankruptcy court—preventing the equity from being used to pay your creditors. Equity is the value of property after you subtract the amount of any liens against the property from its fair market value.

The equity in your home is one such asset in bankruptcy. And bankruptcy exemptions—including the homestead exemption—allow you to protect the property you will need to maintain a home and employment after bankruptcy.

Bankruptcy exemption amounts vary by state, so the amount you will be able to protect will depend on where you live and the type of bankruptcy you file (Chapter 7 or Chapter 13).

In Ohio, bankruptcy exemptions allow individuals to protect certain property from creditors when they file for bankruptcy. The Ohio homestead exemption specifically protects equity in a person's primary residence up to a certain amount. As of the knowledge cutoff in 2023, Ohio law provides a homestead exemption of up to $145,425 of equity in a debtor's home. This means that if the equity in the home is less than this amount, it is generally protected from being sold to pay creditors in a Chapter 7 bankruptcy. In a Chapter 13 bankruptcy, the debtor can keep their property but must pay creditors an amount equal to the nonexempt equity, if any, through the repayment plan. It's important to note that exemption amounts are subject to periodic adjustments for inflation and can vary depending on specific circumstances, such as the number of dependents. Debtors in Ohio may only use state exemptions and cannot opt for federal bankruptcy exemptions. An attorney can provide guidance on how exemptions apply to individual cases and help maximize the protection of assets in bankruptcy.