Indiana Bankruptcy Rules

• Indiana bankruptcy rules.piggy bank image by William Burnett from Fotolia.com
  
  Bankruptcy is federal law and doesn't differ too much from state to state. However, state law does determine several of the most significant substantive aspects of a bankruptcy. For instance, Indiana state law decides who is eligible for Chapter 7 bankruptcy, in which all your debts are discharged. Indiana has no eligibility requirements for filing a Chapter 13 bankruptcy claim, in which you pay off your debts with a payment plan. Furthermore, your debts will not be dismissed in Chapter 13 if you received a discharge under Chapter 13 or Chapter 7 within the past two years.
  
  

Bankruptcy Exemptions

• One component in a bankruptcy case is exemptions and how they are calculated. Exemptions establish what property you can keep after the bankruptcy resolution. The property that is not exempt will be sold by the bankruptcy trustee. Indiana law decides the types of exemptions that you may claim as well as the amount in a bankruptcy. Unlike other states, Indiana law forbids you from choosing federal exemptions-you must only select Indiana exemptions.
  
  

Indiana Exemptions

• The state of Indiana gives several property exemptions. The largest exemption is the Homestead Exemption for home equity worth up to $15,000. If your equity is worth more than $15,000, the bankruptcy trustee will give you $15,000 cash and sell your home. Other Indiana exemptions include retirement accounts and pensions, certain business property, certain work tools and equipment and health savings. In addition, Indiana permits you to claim a "wild card" exemption for $8,000-meaning you get to choose what property it applies to. You may want this exemption to apply to pieces of furniture or your car, for example.
  
  

Eligibility

• In order to be eligibility for Chapter 7 bankruptcy, your income must be less than the state's median income. As of 2010, Indiana's median income is $40,683 for a single person and $70,621 for a family of four. If your income is less, you're automatically eligible for Chapter 7. However, if you income is higher than the median you will need to hire a lawyer to help you qualify for Chapter 7 in Indiana.
  
  

Marriage Laws

• Indiana is a common law property state, not a community property state. In a common law state, spouses can acquire certain debts that are separate from the other spouse. On the other hand, spouses can incur shared debts.
  
  In Indiana, when you file for bankruptcy you can choose to file jointly or separately from your spouse. If you file separately, the court will only dismiss your debts and not your spouse's. In order to wipe out all the debts of you and your spouse, you must file a joint bankruptcy.