Statute of Limitations on Debt in Indiana

• June 21, 2021
• Bankruptcy

The statute of limitations on debt in Indiana varies, depending on the kind of debt it is. For example, car loan debt has a 4-year statute of limitations, whereas state tax debt has a 10-year statute of limitations. Many other debts have a 6-year statute of limitations in Indiana.

A “statute of limitations” refers to the amount of time a creditor has to file a lawsuit to collect an unpaid debt. Even though the statute of limitations on a debt has passed, you should still proceed cautiously when making any contact with a creditor on this debt (also called time-barred debt). In Indiana, the statute of limitations starts on the date of the last action on an account, which means the clock starts over if you write a letter or make a phone call to a creditor. Always consult an attorney before taking action on a debt that you believe may have passed its statute of limitations.

If you have reached a place where your debt is so overwhelming that you’re not sure you’ll ever catch up, it could be time to consider other options, including bankruptcy.  Attorney Jerry E. Smith understands that even the most responsible and hardworking individuals can face insurmountable debt.  Sometimes huge medical bills, job loss, wage garnishment, or other unforeseen economic headwinds make bankruptcy necessary.  Attorney Jerry E. Smith is a skilled and experienced bankruptcy lawyer who can evaluate your debt and help you explore your options.  Our staff is friendly and non-judgmental, and our law firm offers weekend and evening appointments as well as same day filings if possible.  To find out more about how we can help, call us for a free initial consultation at (317) 917-8680.

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

Indiana Statute of Limitations on Debt

How long can debt be collected in Indiana?

Different types of debt can have different lengths of time before the debts become obsolete. Following is a list of Indiana statutes of limitation on debt:

• Mortgage Debt – 6 years
• Medical Debt – 6 years
• Credit Card Debt – 6 years
• Auto Loan Debt – 4 years
• State Tax Debt – 10 years

Lending Tree has compiled a list of the average amount of debt among Hoosiers.  When compared to other states nationwide, Indiana residents tend to have less debt than residents of many other states.  In 2018, the per-capita balance of debt among Hoosiers included:

• Credit Card Debt – $2,570
• Student Loan Debt – $5,300
• Auto Debt – $4,270
• Mortgage Debt – $22,880

Still, even though Indiana’s numbers are lower than those of some states, these debts can feel overwhelming if monthly payments exceed your monthly income. If you are struggling month-in, month-out to make minimum payments and continue to fall behind, it may be time to look at bankruptcy so you can get a fresh financial start.

Different Types of Bankruptcy

Bankruptcy is governed by federal law and is codified in the U.S. Bankruptcy Code.  There are various chapters of bankruptcy, and which one you choose depends on the specific details in your individual case.

Chapter 7 Bankruptcy
To qualify for help from Chapter 7 of the Bankruptcy Code, you can be an individual, a partnership, a corporation, or some other business entity.  A married couple may also file jointly.  Goals of filing Chapter 7 bankruptcy include 1) putting a stop to harassing creditor phone calls, 2) discharging certain debts, and 3) getting a fresh financial start. After the process is over, you won’t owe money for discharged debts, and creditors are prevented from collecting any money from you in the future.  Your creditors are paid from the sale of your nonexempt estate property.  Exempt property – many times a house or vehicle — is the property you can keep.

To qualify for Chapter 7, you must pass a “means test.”  If your monthly income is greater than the state’s median, you must pass this test to determine whether you qualify for filing under Chapter 7.  Not all debts can be discharged in bankruptcy, including child support, alimony, most student loans, taxes and a few other debts.  Individuals must get credit counseling from an approved credit counseling agency 180 days before filing.

Chapter 13 Bankruptcy
Chapter 13 is known as “wage earner’s” or “reorganization” bankruptcy.  You must have a steady income to file Chapter 13.  The process includes developing a plan to repay all or part of your debts by making manageable payments over 3 to 5 years. During this time, creditors can’t start or continue collection efforts.  If all goes according to plan, your eligible debts will be discharged at the end of the plan, meaning you no longer need to pay them.

An early step to help you decide if Chapter 13 bankruptcy is right for you is to consider the total value of your debts. Generally, anyone is eligible for Chapter 13 relief as long as their unsecured debts are less than $419,275 and secured debts (debts where you agree property can be used as collateral) are less than $1,257,850. (Amounts are subject to change; please check with our attorneys for the most current information.)

Documents Needed to File Bankruptcy

As you prepare for bankruptcy, you’ll want to gather some important documents to give to your attorney so he can begin the filing. These include:

• A list of assets and debts
• A statement of financial affairs
• A certificate of completed credit counseling
• A list of your current income and spending
• A list of contracts and leases you’ve signed, if any
• Pay stubs from work in the 60 days before you file
• A copy of your most recent year’s tax return.

Contact Attorney Jerry E. Smith Today

If you are drowning in debt and looking for a way to start over, bankruptcy might be the right option for you. Attorney Jerry E. Smith has helped countless clients get debts discharged through bankruptcy, putting them on a firmer financial foundation. To find out if this is the right path for you, call us for a free initial consultation at (317) 917-8680.