Before filing bankruptcy in Indiana, it is important to understand the basic bankruptcy laws in the state. Whether you consult a lawyer or file for bankruptcy on your own, it is best to know a little about the process and what is expected of you.
Some people believe that they will lose everything they own in a bankruptcy. This is not true; Indiana bankruptcy laws allow for exemptions, as follows:
• Real property worth up to $8,000, which includes your vehicle and other personal belongings.
• The value of your home up to $15,000. It is possible to lose your home in bankruptcy if the equity in your home is worth more than $15,000.
• Some pensions.
• Retirement plans.
• 75% of unpaid, earned wages.
• Some life insurance proceeds, providing the policy restricts use of proceeds to pay creditors.
• Welfare payments.
• Flexible spending account balances.
• Jointly owned business property.
The type of bankruptcy you can file depends on your income. There are two types of personal bankruptcy: Chapter 7 and Chapter 13. In a Chapter 7 bankruptcy, your debts will be discharged and you will no longer owe money to your creditors. In a Chapter 13 bankruptcy, your debt will be restructured, and you will enter into a repayment plan.
You are eligible to file for Chapter 7 bankruptcy if your income falls below the median income in Indiana at the time of filing. If your income is higher than this, you can only file a Chapter 13 bankruptcy. Median income is determined by the household size, as follows:
• One person household: $40,135
• Two person household: $51,104
• Three person household: $59,028
• Four person household: $69,226
Not all debts are eligible to be discharged in bankruptcy. Debts that are not dischargeable include:
• Student loans, except in extreme cases of financial hardship. Generally, student loans are only discharged if the debtor is permanently physically disabled in a way that they have no chance of holding a job in the future.
• Child support payments.
• Cash advances greater than $825, if they were received recently.
• Most overdue tax payments.
Before a person files for bankruptcy in Indiana, they must first complete a counseling course. This is usually a short questionnaire completed online, and will go over the debtor’s income and expenses, as well as the reasons the debtor is considering bankruptcy.
There is a fee for filing for bankruptcy in the state of Indiana: $299 for Chapter 7 and $274 for Chapter 13. This is for one person or a married couple filing a joint bankruptcy. The fee for a bankruptcy lawyer varies, starting around $900, and usually includes the filing fee as the lawyer will handle filing.