Don’t Let Surplus Funds Go Unclaimed: Know Your Rights

Bankruptcy and foreclosure are two of the most stressful financial events a person can face—but they can also intersect in ways that offer unique opportunities for relief. In Ohio, homeowners going through foreclosure may be unaware they could be entitled to unclaimed surplus funds. These are leftover funds from a sheriff's sale after a foreclosed property sells for more than what is owed to the lender. Combined with bankruptcy proceedings, the fate of these surplus funds becomes even more critical.

Understanding how unclaimed surplus funds are treated during bankruptcy and foreclosure in Ohio can help homeowners protect what they're rightfully owed and make smarter decisions about their financial future.

What Are Unclaimed Surplus Funds?

After a foreclosure sale, the property is auctioned off—often through a sheriff's sale. If the winning bid exceeds the debt owed to the mortgage lender (including fees and costs), the extra money is called a "surplus." The county court often holds these unclaimed surplus funds, waiting for the rightful party—usually the former homeowner—to claim them.

Unfortunately, many homeowners don't know these funds exist or assume the bank keeps the entire sale amount. You may be entitled to this money if you've lost your home to foreclosure and the sale price exceeds your debt. The problem arises when these funds are left unclaimed or when bankruptcy proceedings affect your rights to them.

How Bankruptcy Impacts Surplus Funds

When a homeowner files for bankruptcy—especially after a foreclosure sale—the issue of who owns the surplus funds becomes complicated. Whether or not you can access the unclaimed surplus funds depends on several factors, including:

1. Timing of the Bankruptcy Filing

If you file for bankruptcy after your home has been foreclosed and sold, the surplus funds are typically considered part of your bankruptcy estate. That means the bankruptcy trustee may use those funds to pay off creditors unless exemptions apply.

The automatic stay may pause if you file before the foreclosure sale is finalized. In this case, the foreclosure might not proceed until the bankruptcy is resolved or the lender is granted permission to continue.

2. Chapter 7 vs. Chapter 13 Bankruptcy

In a Chapter 7 bankruptcy, any assets you own—including surplus funds—can be liquidated to pay off unsecured debts unless those funds are exempt under Ohio bankruptcy laws.

In a Chapter 13 bankruptcy, the funds may be factored into your repayment plan. While this doesn't necessarily mean you lose the money, it can influence how much you repay and how long your plan lasts.

3. Exemption Rules in Ohio

Ohio's exemption laws may allow you to protect a portion of the unclaimed surplus funds, but exemptions must be claimed appropriately. An experienced attorney can help determine whether the surplus is protected and how best to structure your bankruptcy filing.

Why Homeowners Miss Out

Many homeowners don't know these funds exist or are entitled to them. Additionally, failing to inform your bankruptcy attorney about the foreclosure and potential surplus funds can result in missed opportunities. Even worse, if the funds are left unclaimed for a specific period, they may revert to the state or be absorbed into your bankruptcy case without you ever seeing a penny.

Conclusion

If your home was recently sold in foreclosure and you suspect it sold for more than your outstanding mortgage debt, you could be entitled to unclaimed surplus funds. But if you're also considering or involved in bankruptcy, the situation becomes much more complex. Timing, filing type, and legal strategy can all impact whether you receive those funds or lose them to creditors.

For strategic legal guidance on recovering unclaimed surplus funds and managing bankruptcy or foreclosure proceedings in Ohio, trust the experienced Ohio surplus proceeds lawyer

at MPC Law. Their team understands how to protect your rights, recover what's rightfully yours, and guide you through every step of the legal process.