Summary of Assets Exempt from Legal Execution
Although the methods or proceedings in aid of execution vary from state to state, each state holds certain property exempt from levy, attachment and/or garnishment. Upon review of the laws governing exemptions in each of the following states, Ohio, Kentucky, Indiana, Illinois and Pennsylvania, they all seem to contain similar categories of property.1 Of highest importance to creditors, particularly those in the healthcare industry, is real property. This is based upon the fact a person's residence is most likely his or her most valuable asset. Unfortunately, it is also has one of the highest if not the highest exemption. Ohio in particular provides for the highest exemption when the property is real estate. Beginning April 1, 2013 an Ohio resident was allowed to claim $132,900.00 of the value of their residence as exempt funds. This means a a person a person with $133,000 in equity, which in this day and age is almost unheard of, all but $100 of that could be exempt. Although the exemption amounts in Kentucky, Indiana, Illinois and Pennsylvania are much lower; $5,000.00, $15,000, $15,000, and $8,725 respectively, if equity in the property is low all or most of it may still be exempt from execution. This does not mean a creditor should forego a judgment lien just that it must rely more heavily upon consensual pledges of collateral in resolving unpaid debt (ie: a mortgage) or execution against other non-exempt personal property.
Depending within which of the five states the consumer resides, this could mean much if not all of a consumer's assets are exempt. All five states provide some level of exemption for personal earnings. Ohio, Kentucky and Indiana statutes each allow for a 75% exemption on all net income received from a person's employment. This means a creditor is only allowed to take up to 25% of a consumer's wages. The exemption increases up to 90% in Indiana if the consumer can show good cause as to why they need the increased exemption. In Illinois the exemption is 85%. Each of these four states also has a minimum net income per pay period, which is based upon the federal minimum wage, a consumer must make before any of their wages can be garnished. For example, in Illinois if a consumer makes less than $371.25 per week net income 100% of the consumer's wages are exempt. Pennsylvania takes the exemption one step further providing that 100% of all personal earnings is exempt from garnishment. There is no minimum net income a consumer must make to be entitled to the full exemption.
All five states also provide, to a varying degree, an exemption for what is commonly thought of as personal property, funds in bank accounts, household furnishings, motor vehicles, clothing and jewelry. Ohio is the only state that separates these into different categories each of which with its own exemption. An Ohio resident is entitled to a motor vehicle exemption of $3,675, jewelry exemption of $1550, funds in a bank account $450 exemption and generally what is captioned personal property with an aggregate exemption of $12,250 and $575 maximum exemption in any particular item. Each of the other states provide more of a total general personal property exemption plus a motor vehicle exemption. Most of the states also provide a separate exemption for medically necessary health aids and tools necessary for a profession, such as a lawyer’s legal books or a doctor's instruments. Other property of importance to a health care creditor would be the fact that most of the states provide for a 100% exemption of all life insurance, medical insurance and group insurance benefits paid to the consumer or on behalf of a consumer's dependents.
Just as one would expect most if not all of the states specify that all government benefits, such as social security, disability, unemployment, worker's compensation, black lung, veteran's and public assistance payments. Similarly payments to a consumer for spousal or child support are also fully exempt. Of more concern to the health care creditor is the fact that payments from retirement, pension, IRA and similar accounts are also completely exempt in the majority of these courts. So too are wrongful death benefits. Except for Pennsylvania, payments to residents in the other states for bodily injuries and pain and suffering are only partially exempt. Ohio has the greatest exemption at $23,000 and Kentucky the lowest at $7,500. It is important to keep in mind that all of these exemptions are not set in stone and states may increase or decrease them based upon a number of factors including inflation. Ohio for instance has been gradually increasing many of its exemptions over the past six years. The exemptions are currently set for review in April 2016.