Will filing bankruptcy make me lose my house or car?

Answered by ProctorLaw

This is general legal information, not legal advice. No attorney-client relationship is created. Talk with a licensed attorney about your situation.

Short answer: probably not. Most people who file bankruptcy in Ohio keep their home and their car. Ohio's exemptions protect a good deal of equity, medical bills and credit cards are exactly the kind of debt bankruptcy erases, and if you are behind on the house or car payments, Chapter 13 exists specifically to let you catch up. Which chapter fits depends on your income and how much equity you have.

What Ohio lets you keep. Ohio uses its own exemption list (R.C. 2329.66), with amounts that were last adjusted on April 1, 2025: up to $182,625 of equity in your home; up to $5,025 of equity in one vehicle; household goods up to $800 per item and $16,850 total; $3,200 in tools of your trade; $2,125 in jewelry; $625 in cash or bank balances; a $1,675 "wildcard" you can apply to anything; and retirement accounts (401(k), IRA) with no dollar limit. A married couple filing together can each claim these amounts, so the homestead protection doubles to $365,250. "Equity" means value minus what you owe, so a $180,000 house with a $140,000 mortgage has $40,000 of equity, which is fully protected. A car worth $12,000 with a $9,000 loan has $3,000 of equity, also protected.

Chapter 7 in plain terms. Chapter 7 wipes out unsecured debt (medical, credit cards, personal loans) in about three to four months. A trustee can sell property that is not exempt, but in most Ohio cases there is nothing to sell. To qualify you must pass the "means test": if your household income is at or below Ohio's median (for cases filed since April 2026, about $66,239 for one person, $83,725 for two, $102,504 for three, $123,702 for four), you qualify automatically; above that, a budget calculation decides. The court filing fee is $338, you must complete a short credit counseling course before filing and a financial-management course before discharge, and attorney fees for a routine case commonly run in the $1,000 to $1,500 range. You cannot file Chapter 7 again for eight years.

Keeping the car in Chapter 7: if the car is paid off and the equity is within the exemption, it is yours. If there is a loan, you keep it by staying current and signing a reaffirmation agreement with the lender (11 U.S.C. 524(c)), which keeps you personally on the hook for that one debt, or by redeeming it with a lump-sum payment of its current value (11 U.S.C. 722). Ohio bankruptcy courts do not recognize a "just keep paying" option without reaffirmation, so plan on one of those two.

Keeping the house in Chapter 7: if your equity fits the exemption and you are current on the mortgage, you keep it. Chapter 7 does not fix a mortgage that is already behind; the lender can resume foreclosure once the case ends.

Chapter 13 in plain terms. Chapter 13 is a court-supervised repayment plan of three years (if your income is below the median) or five years (if above). You keep everything. Missed mortgage payments are spread out and cured through the plan while you resume regular payments (11 U.S.C. 1322(b)(5)); the lender cannot foreclose while the plan is in good standing. A car loan more than two and a half years old can be "crammed down" to the car's current value with a lower interest rate; a newer loan must be paid in full but can still be stretched over the plan. Unsecured creditors get only what your budget shows you can afford, often pennies on the dollar, and the rest is discharged at the end. The filing fee is $313, and in the Southern District of Ohio the standard attorney fee (currently $4,350) is mostly paid through the plan rather than up front. You need regular income to qualify.

Which one fits. Current on the house and car, income below the median, equity within the exemptions: Chapter 7 is usually the answer. Behind on the mortgage or car, or income above the median, or non-exempt property you want to protect: Chapter 13. Either way, filing stops collection calls, lawsuits, garnishments, and foreclosure immediately through the automatic stay (11 U.S.C. 362). Your case would be filed in the U.S. Bankruptcy Court for the Southern District of Ohio at Columbus.

Before you file. Do not run up new charges, pay back family members, or transfer property into someone else's name; those moves can be undone and can cost you the discharge. Do keep paying the mortgage and car loan if you intend to keep them.

This is general information, not legal advice. Most consumer bankruptcy attorneys in Ohio offer a free consultation and will run the means test and exemption numbers with you in one meeting.