There are many kinds of bankruptcy but the only type of bankruptcy this office handles is the “Chapter 7 Bankruptcy” with hearings typically held in Indianapolis or Anderson. This is the most common type of bankruptcy generally known to “wipe the slate clean”. The other personal type of Bankruptcy is the Chapter 13 Bankruptcy where one might pay pennies on the dollar for 3-5 years. We do not offer Chapter 13 Bankruptcy at this time. A Chapter 7 Bankruptcy is normally a simplified process for most filers but because everyone’s facts and life circumstances are different, we cannot assume that a Chapter 7 Bankruptcy would be your best option, let alone Bankruptcy. Filing a Chapter 7 Bankruptcy is restrained by a filer’s income level AND even if your income is limited enough, you still may not want to file a Chapter 7 because you may not want to give up certain assets that you would like to keep. Bankruptcy is a financial planning tool though just like many other options. Though some may feel stigmatized by the filing of a bankruptcy, they should not. In fact, without the risk of bankruptcy, those who invest money would never make money on the interest earned as interest earned on investments is based on risk. Risky investments – high rate of return. Low risk investments – low rate of return. There is a long history of clearing out debt can provide economic growth because people can thrive again without the weight of debt around their necks.
There are many reasons to file a Chapter 7 Bankruptcy:
- Completed in only 3-6 Months rather than 3-5 years
- You, as a typical filer, would get to keep most of your things (see exemptions)
- Stops Creditor Harassment
- Can immediately STOP garnishments
- Can immediately STOP Sheriff Sales
- Usually no debt the bankruptcy is discharged resulting in that “clean slate” or “fresh start”.
- Getting credit is totally possible after a Chapter 7 and rebuilding begins immediately
- Still possible to keep your house and car
Not all debts are dischargeable in a bankruptcy though most are. IRS Debt and Student Loan Debt is generally considered non-dischargeable but there are even exceptions to that. If IRS Debt or Student Loan Debt is what is holding you down, there are other options we can discuss with you that might still give you the relief you need.
Indiana Bankruptcy Exemptions
The exemption amounts are per person, so if you are a married couple, each can utilize their exemption. For instance, if married, you have $35,000 in equity in your home, it is exempt and would not be required to be sold. Unless otherwise noted, all law references are to the Indiana Code.
- 34-55-10-2 – Real or personal property used as a residence up to $19,300; equity in real estate held as tenants by the entirety might be fully exempt if only one spouse files (this does not apply when both owners file for bankruptcy).
- 30-4-3-2 – Spendthrift trusts.
- 34-55-10-2 – Health aids; funds in medical savings accounts and health savings accounts; up to $350 of intangible personal property (except for money owed to you)x
- 34-55-10-2(c)(9), (10) – Education savings account (529 and Coverdell) contributions made more than 2 years prior to filing; other conditions apply.
- 24-4.5-5-105 – Either 75% of earned but unpaid wages or 30 times the federal minimum hourly wage, whichever is greater. A judge may approve more for low-income debtors.
- (In re Haraughty, 403 BR 607 (Bankr. SD Indiana 2009).)
- 11 U.S.C. § 522 – Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
- 11 U.S.C. § 522(b)(3)(C)(n) – IRAS and Roth IRAs (limits apply).
- 5-10.3-8-9 – Public employees.
- 36-8-8-17 & 10-12-2-10 – Police officers.
- 5-10.4-5-14 – State teachers.
- 36-8-7-22 & 36-8-8-17 – Firefighters.
- 34-55-10-2(c)(11) – Earned income tax credit.
- 22-3-2-17 – Workers’ compensation.
- 22-4-33-3 – Unemployment compensation.
Tools of Trade
- 10-16-10-1 – National guard arms, uniforms, and equipment.
- 27-1-12-14 – Life insurance policy or proceeds if the beneficiary is spouse or dependent.
- 27-1-12-29 – Group life insurance policy.
- 27-2-5-1 – Life insurance proceeds if policy prohibits use to pay creditors.
- 27-8-3-23 – Mutual life or accident policy proceeds as needed for support.
- 27-11-6-3 – Fraternal benefit society benefits.
- 27-1-12-17.1 – Employer’s life insurance policy on an employee.
- 23-4-1-25 – Specific business partnership property.
- 34-55-10-2(c)(2) – $10,250 of real estate or tangible personal property.
The list above includes the majority, but not all, bankruptcy exemptions available in Indiana. All states are different and may have laws that even exclude certain federal bankruptcy rules giving debtors the option of taking the federal option or the state option. An attorney would be able to guide you through that complicated process to maximize your ability to retain any assets available to you under the law. Though we try to keep this website current, the exemptions change so often, usually for the better, but the list above may not be accurate. Consider the list above a generalization and not legal advice. Please consult with one of our attorneys to see which exemptions apply to you. This office only files Bankruptcy for residents of Madison County, Hamilton County, and Marion County within Indiana’s Southern District Federal Bankruptcy Court.