People who file for bankruptcy protection have usually tried everything else they can to get their finances under control. For those who take the step, one decision that has to be made is what type of bankruptcy they’ll file.
Individuals who pass the means test for Indiana may opt to file a Chapter 7 bankruptcy. This is informally known as a liquidation bankruptcy because the trustee has the option of liquidating non-exempt assets to pay off creditors. The trustee has a lot of discretion with this, so they may opt not to liquidate anything if the proceeds wouldn’t make a significant dent in the debt of the bankruptcy.
Exempt property is safe
Certain property is exempt from the bankruptcy process. In Indiana, filers must use state exemptions instead of federal exemptions. Typically, a married couple can double each of these limits as long as they’re both on the bankruptcy filing.
- Home equity: Up to $19,300
- Intangible assets: Up to $400
- Retirement and pension accounts: Full value
- Specific insurance benefits: Full value
- Wages: Up to the smaller of 30 times the minimum wage or 75% of weekly wages
Filers can also keep health savings accounts, military uniforms and equipment, earned income tax credit, health aids, and up to $5,000 in education savings accounts if they were funded two years prior to the bankruptcy filing.
Indiana doesn’t offer any exemptions for vehicles or tools of the trade. These assets would have to be counted under the $10,250 wildcard exemption.
Anyone who’s considering filing bankruptcy in Indiana should learn how the process will impact them. They should also find out about their rights and responsibilities because these can greatly affect the bankruptcy process.
