Bankruptcy Blog

Indiana Bankruptcy Exemptions

State and federal bankruptcy exemptions are designed to help you protect some property when you are going through the bankruptcy process. In Indiana, most people can protect some assets through exemptions, depending on what they own, their level of income and which bankruptcy chapter they file under. Some individuals can exempt everything they own, while others may have to sell some assets to pay creditors.

For the most part, you can exempt items you need to maintain a job and household.  You must use form Schedule C: The Property You Claim as Exempt to list these essential items and file the form with your bankruptcy petition and supporting documentation.  Such items include some equity in a vehicle, clothing, furniture, kitchen items, bedding and other essentials. The court will review your list of items to make sure they are allowable.

Following are some of the bankruptcy exemptions to explore in Indiana:
Homestead Exemption
The homestead exemption protects a portion of your equity in a house or primary residence. You can exempt up to $19,300 in real estate used as a residence. Ind. Code § 34-55-10-2(c)(1); 11 USC § 522(b)(3)(B).

Motor Vehicle Exemption
Indiana does not have a stand-alone vehicle exemption, but you can use the state’s “wildcard exemption” to protect equity in your SUV, car or truck.

Wildcard Exemption
You can protect any real estate that you do not live in full-time (cabin or vacation home, for example) or other property of your choosing (a vehicle, for example) up to a value of $10,250. Ind. Code § 34-55-10-2(c)(2).

Retirement/Pension Benefits
Any interest in a qualified retirement plan is exempt. Ind. Code § 34-55-10-2. Your bankruptcy attorney can explain retirement exemptions in greater detail.

Insurance Benefits
Most life insurance, accident insurance and other forms of insurance are exempt that name a spouse, children other dependents or entities as beneficiaries. Ind. Code §§ 27-1-12-14; 27-1-12-29, 27-2-5-1; 27-8-3-23.

Workers’ Compensation
Any workers’ compensation payments are exempt (minus child support claims). Ind. Code § 22-3-2-17.

Unemployment Benefits
Unemployment benefits are exempt. Ind. Code § 22-4-33-3.

Personal Property

  • Personal property up to $400. Ind. Code § 34-55-10-2.
  • Some contributions to education savings accounts (529 and Coverdell). Code § 34-55-10-2(c )(9), (10).
  • Funds in a health savings account. Ind. Code § 6-8-11-19.

Exemptions from bankruptcy can be complicated and very detailed.  That’s why you need a skilled bankruptcy attorney on your side to make sure you protect as many of your assets as you can.  Attorney Jerry E. Smith has helped hundreds of clients walk through bankruptcy, keeping as many assets intact as possible.  To find out more, call him at (317) 917-8680.

“Get Hope. Get Help. Get Peace of Mind.”

Types of bankruptcy

Chapter 7 Bankruptcy

To qualify for Chapter 7 of the Bankruptcy Code, you can be an individual, a partnership, a corporation, or some other business entity. A married couple may file jointly. Chapter 7 is sometimes called a “liquidation” bankruptcy, and it enables a person to have many, but not necessarily all, debts discharged after the process is over.  As soon as you file bankruptcy, all harassing phone calls and letters from creditors must cease, and a bankruptcy discharge prevents creditors from trying to collect any money from you in the future.

But not every individual qualifies for Chapter 7.  Chapter 7 was changed in 2005 to include a “means test” to try to screen out those who may abuse the system. If your monthly income is greater than Indiana’s median, you must pass this test to determine whether your filing is considered abusive. A Chapter 7 lawyer in Indianapolis can help you navigate through the means test to improve your chances of bankruptcy relief.

There are a few kinds of debt that cannot be eliminated through bankruptcy. Some of these include:

  • Alimony
  • Child support
  • Most student loans (except in rare instances)
  • Some types of taxes
  • Fines imposed for DUI convictions
  • Debts for criminal restitution.

Chapter 13 Bankruptcy

Chapter 13 is sometimes called “wage earner’s” bankruptcy, and it is used by individuals who have a steady income.  It can also be used by businesses that want to reorganize their debt while maintaining day-to-day operations.  Under Chapter 13, you develop a plan to repay all or part of your debts by making payments over the next three to five years. During this time, creditors can’t start or continue collection efforts. If all goes according to plan, your debts will be discharged and eliminated at the end of this period.

A skilled bankruptcy attorney can help you determine whether Chapter 7 or Chapter 13 is the best option for you based on your unique circumstances.

How to prepare for filing bankruptcy

You’ll want to gather the following information to help your attorney prepare to file bankruptcy on your behalf:

  • A list of assets and debts
  • A list of your current income and spending
  • A list of contracts and leases you signed
  • A statement of financial affairs
  • A certificate of credit counseling
  • Evidence of payment from work you got within 60 days before you filed
  • A copy of your most recent federal tax return.

If there is other documentation needed, your attorney will discuss that during his first meeting with you

Credit counseling required

Prior to filing bankruptcy, you will be required to take a credit counseling course and receive a certificate.  There are many approved credit counseling agencies throughout the nation.  You must complete this counseling within 180 days before filing.

Contact Attorney Jerry E. Smith Today

If you’re facing overwhelming debt and don’t know where to turn, bankruptcy may be a viable option. Through exemptions, you can likely protect some of your assets while getting other debts discharged. An affordable and experienced bankruptcy attorney can walk you through the process and explain to you which assets are exempt under Indiana and federal law. Making a phone call and reaching out is the first step toward a brighter future. To find out how attorney Jerry E. Smith can help, call him at (317) 917-8680. The initial consultation is free up to one hour.