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Indiana Bankruptcy Laws
While 27% of Indiana clients generally choose Chapter 13, the remaining 73% file Chapter 7 bankruptcy. In order to allow them to protect some amount of necessary property, both federal and state laws allow them to claim some types of exemptions. Indiana law allows only state exemptions, although those are typically generous:
Homestead |
Up to $15,000 |
Personal Property |
Spendthrift trusts; health aids, medical savings accounts; tangible personal property up to $300; up to $8,000 of real estate or other tangible property |
Wages |
The minimum of 75% of wages earned but unpaid or 30 times the federal hourly minimum wage, whichever is greater |
Pensions |
Tax exempt retirement accounts; Traditional and Roth IRAs up to $1,095,000/person; public employees; police; state teachers; public or private retirement benefits; firefighters; sheriffs |
Public Benefits |
Crime victims’ compensation; worker’s comp; unemployment |
Tools of the Trade |
Arms, uniforms, and equipment for National Guard members |
Insurance |
Some types of life insurance policies or proceeds; group life insurance; fraternal benefits |
Miscellaneous |
Property from a business partnership |
Once the type of bankruptcy and the possible exemptions are determined and all other requirements, such as credit counseling, are fulfilled, the client and their attorney file a bankruptcy petition with the court. The bankruptcy trustee takes charge of the process and sets up a 341 meeting with creditors to examine the plan and allow the creditors to ask any pertinent questions. If the bankruptcy is approved, the Chapter 7 client is free of debt and can start fresh, and the Chapter 13 client is ready to begin regular payments on the new plan, aiming to be debt-free in five years or less.
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