Bankruptcy Exemptions for Hoosiers

Indiana residents can file for personal bankruptcy under either Chapter 7 or Chapter 13 of the US Bankruptcy Code. Upon the initiation of your bankruptcy case, all of your property and assets become a part of the “bankruptcy estate.” In a Chapter 13 filing, you remain in control of the bankruptcy estate, and so may keep your property. However, Chapter 13 requires the repayment of your debts over a 3–5-year time period. A Chapter 7 filing, on the other hand, results in the discharge of your debts, but may also involve the liquidation of some of your property.

Fortunately, some protections exist to preserve certain property. For residents who have lived in Indiana for at least two years, Indiana law details the property you may exempt from the bankruptcy estate. Indiana residents that have not resided in Indiana for at least two years must follow the exemptions of their previous state.

Under Indiana law, you may protect up to $19,300 in equity in your personal or family home. You may also protect another $10,250 in additional real estate equity or personal property. If you are filing bankruptcy as a married couple these amounts are doubled.

There are several other exemptions you may find useful:

• Up to $400 in cash and deposit accounts

• Any professionally prescribed medical aids

• Any interest a debtor has that is held as a tenant in the entirety (this applies to the marital home if only one spouse files for bankruptcy and there is not a joint mortgage on the home)

• Many retirement accounts, including 401(k) accounts

• Medical savings accounts

• Most funds in a 529(b) or 530(b) tuition account

• The portion of any income tax refund that was attributable to either the federal or state Earned Income Tax Credit

• Any service-connected disability benefit

• Compensation from the supplemental state fair relief fund

To maximize these exemptions and protect as much of your property as possible, they must be claimed in a proper and timely fashion. For assistance in filing your bankruptcy or learning more about exemptions for which you may qualify, contact our bankruptcy law professionals at McNeelyLaw LLP.

This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion of any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.