For most Ohio homeowners, the answer is yes. Many people who file bankruptcy keep their homes, and bankruptcy is often the tool that saves a home from foreclosure.
Losing the house is one of the biggest reasons people put off getting help. Here’s how it really works.
It comes down to equity
It comes down to equity
Whether you can keep your house usually depends on your equity: what the home is worth minus what you still owe on it.
For example, if your home is worth $180,000 and you owe $150,000 on your mortgage, your equity is $30,000.
Ohio law protects a set amount of home equity through the homestead exemption. If your equity is less than the exemption, the bankruptcy trustee can’t sell your house to pay creditors. The amount is adjusted every few years. If you and your spouse own the home together and file together, you may each be able to claim it, which can double the protection.
Many Ohio homeowners, especially those who bought in the last several years or refinanced, have equity well under the protected amount.
If you file Chapter 7
Chapter 7 is the “fresh start” bankruptcy that wipes out debts like credit cards and medical bills, usually within a few months.
If your equity is fully protected and you keep making your mortgage payments, you can generally keep your home. Your mortgage stays in place, but the other debts that were making those payments hard can go away.
Chapter 7 is usually not the best fit if:
You have a lot of equity above the exemption, or
You’re behind on your mortgage and need time to catch up.
That’s where Chapter 13 comes in.
If you file Chapter 13
Chapter 13 is built for homeowners. It sets up a 3- to 5-year repayment plan, and it lets you:
Catch up on missed mortgage payments over time instead of all at once
Protect equity that goes beyond the exemption
Stop a foreclosure that’s already started
For many families who have fallen behind, Chapter 13 is the difference between losing the house and keeping it.
Bankruptcy can stop a foreclosure right away
As soon as you file, an automatic stay takes effect. This court order immediately stops most collection actions, including foreclosure lawsuits and sheriff’s sales.
Ohio uses a court-based foreclosure process, which often takes months. That gives homeowners time to act. Even if a sheriff’s sale is already scheduled, filing before the sale can stop it. The sooner you get advice, the more options you’ll have.
What You’ll Need to Keep Doing
Bankruptcy protects your home, but you still have obligations:
Keep up with your mortgage payments (or your plan payments in Chapter 13)
Stay current on property taxes and homeowner’s insurance
Be honest and complete about your property and its value
If you do your part, bankruptcy can give you a stable footing instead of a constant fear of losing your home.
A Few Details That Matter
Residency: To use Ohio’s exemptions, you generally need to have lived in Ohio for about two years before filing. If you moved here more recently, different rules may apply.
Home value: How your home is valued affects the equity calculation, so it’s worth getting it right.
Second mortgages and HELOCs: In some Chapter 13 cases, a second mortgage that isn’t backed by any equity can be stripped off. That can save homeowners thousands.
These details are why a short conversation with an attorney can be so valuable. Small facts can change the outcome.
The Bottom Line
Filing bankruptcy in Ohio does not mean losing your house. For most homeowners, the right chapter, filed at the right time, protects the home and gets rid of the debt that was putting it at risk.
If you’re worried about your house, behind on payments, or facing foreclosure, don’t wait until the sheriff’s sale date is close.
Lake Legal Services offers free, confidential consultations for Ohio homeowners. Call 330-605-3508 or contact us to find out how to protect your home.
This article is for general informational purposes only and is not legal advice. Reading it does not create an attorney-client relationship. Every situation is different; consult an attorney about your specific circumstances.
