Filing bankruptcy can be a lifesaver for people with overwhelming debts, allowing them to get a fresh start. There are multiple forms of bankruptcy, but most individuals use one of two types. Chapter 7 involves liquidating most of your assets to pay off as many debts as possible. Chapter 13 allows you to reorganize your debts and pay as many of them as possible over a specified length of time. The federal court system governs bankruptcy law, but specific conditions can vary by state.
Indiana's Bankruptcy Courts
Indiana has two districts for filing bankruptcy: Northern and Southern. The main court for the Northern District is in South Bend, and it's in Indianapolis for the Southern District. However, each district also has several provisional offices where you may file. You must file in the district where you live.
Chapter 7 Bankruptcy Eligibility
Eligibility for Chapter 7 bankruptcy depends on how your income compares to Indiana's median income during the six months prior to filing. In Indiana, the median income for a single-person household is $3,437 monthly, or $41,249 annually, as of 2012. If you earned less than this, you may file for Chapter 7. If you earned more, you may still be able to file Chapter 7, but only if you can pass a strict means test.
Chapter 13 Bankruptcy Plan Duration
The duration of your Chapter 13 bankruptcy plan also depends on comparing your average monthly income to Indiana's median. If you earn less than the median, your plan will typically last three years. If the courts find good cause to extend the time, it can last up to five years. If your income is at least as much as Indiana's median, your plan must usually be five years, unless you can pay all your unsecured debts sooner.
Property Exemptions Available to Indiana Residents
Like many states, Indiana has its own set of exemptions you must use when filing for bankruptcy in the state. These exemptions cover personal and real property that you may legally exclude from your bankruptcy estate.
In Indiana, you may keep all prescribed health aids, up to $300 in intangible personal property, and up to $8,000 in tangible personal property and real estate, separate from a homestead. The homestead exemption covers up to $15,000 in equity. Retirement plans, medical care savings accounts, and interests in qualified tuition programs are also exempt, subject to certain conditions. Unlike many states, Indiana does not have a specific exemption for a car.
Indiana's exemptions only apply if you have lived in the state for at least two years. Otherwise you must use those from your previous home state.
Your Bankruptcy Case is Unique
Bankruptcy laws in Indiana are complicated and each case is unique. This article provides a brief, general introduction to the topic. For specific information regarding your case, please contact an Indiana bankruptcy lawyer.