Bankruptcy and 11 USC 522(p): Understanding Limitations on Homestead Exemptions

Bankruptcy is a legal process that offers individuals or businesses relief from overwhelming debt. One key aspect of personal bankruptcy is the concept of exemptions, which allow filers to protect certain property from creditors. The homestead exemption is a significant safeguard that protects equity in a debtor's home. For us in Ohio, the current homestead exemption is $161,375.00 per debtor. However, under 11 USC 522(p), there are important limitations on this exemption, particularly for those seeking to shield a recently acquired, upgraded, or APPRECIATED VALUE IN HOMES -- the last of which is especially affecting us in Ohio due to significant property value increases in recent years.

Section 522(p) restricts the amount of equity a debtor can claim as exempt in their homestead if they purchased the property within 1,215 days (approximately 3 years and 4 months) prior to filing for bankruptcy. As of 2024, the cap is set at $189,050, limiting the protection regardless of the Ohio's general homestead exemption limits. This provision is aimed at preventing individuals from abusing bankruptcy laws by relocating assets into high-value properties shortly before filing.

By imposing these limits, 11 USC 522(p) is hoping to strike a balance between offering debtors a fresh start and protecting creditors from abuse.

I’ve been seeing this provision come into play more and more lately. Again, this is because of the significant appreciation in home values over the past few years. This type of nuanced bankruptcy code provision is why it’s important to contact a bankruptcy attorney as soon as you’re considering filing. The attorney can assist you in best navigating this provision of the code.

Contact me today to discuss exactly how a bankruptcy will look for you, and how it can help eliminate your debts. Attorney Lucas Ruffing, 740-815-1114 (call/text).

Thanks for Reading,

Lucas Ruffing
Attorney
740-815-1114 (call/text)
LucasRuffingLaw@gmail.com (email)