Bankruptcy in Indiana
Did you know that the most common cause of bankruptcy is unpaid medical bills? Two other very common causes are job loss and business collapse.
What does this mean? It means that many very hard-working people need to file for bankruptcy protection. In fact, that’s why bankruptcy laws exist, to give hard-working people, who have hit a rough patch, a fresh start.
If you’ve hit rough times, you’re entitled to hit the “do over” button too. We’ll use this article to get you started by giving you some background on Indiana bankruptcy law (and how it’s different from other states), explain the distinction between Chapter 7 and 13 bankruptcies, and help you find and work with a great bankruptcy attorney.
How Indiana Bankruptcy Law Differs from the Laws of Other States
States bankruptcy laws differ from one another. The differences lie mostly in the assets that can be protected. Property is protected if it falls under one of the many exemptions.
In Indiana, federal bankruptcy exemptions are not available; so, to protect property you must look to the state’s bankruptcy exemptions (or other protections such as retirement plans that you set up at work and homes protected by tenancy by the entireties).
Indiana exemptions include (but are not limited to):
- Contributions made to 529 Plan accounts at least one year prior to filing bankruptcy.
- Home equity (up to $17,600, but doubled to $35,200 for married couple).
- Money in health care savings accounts.
- Personal property (which can cover a car).
- Wild card exemption that you can use to protect the assets of your choice.
Filing Bankruptcy in Indiana: Chapter 7 or Chapter 13
When an individual or married couple files for bankruptcy protection, in Indiana or in any other state, either Chapter 7 or Chapter 13 bankruptcy must be chosen. Both chapters get you to a bankruptcy discharge and protection from creditors.
Chapter 7 gets you back on the dance floor more quickly than Chapter 13. It takes about 6 months and you must qualify to file. The easiest way to qualify is if your income falls below Indiana’s median income, which ranges from $39,987 to $67,296+, depending on how many people are in your family. All unsecured debt is forgiven.
Chapter 13 gets you back on the dance floor, in 3 to 5 years. If you don’t qualify for Chapter 7, Chapter 13 may be the best filing for you. There is no qualification test. Debts are either discharged or renegotiated, so you repay debt under terms more favorable to you than if you hadn’t filed for bankruptcy protection.
How to Find and Select an Indiana Bankruptcy Attorney
The ideal way to find and select a bankruptcy lawyer is to get a referral from your best friend or mom. Like playing the game of “Six Degrees of Kevin Bacon”, you likely know many people who have filed bankruptcy, but they might not have shared that difficulty with you.
If a personal referral doesn’t work, use the Internet and enter “Find an Indiana Bankruptcy Attorney” in your favorite search engine or ask the local bar association, accountant, or financial advisor for a referral.
Many bankruptcy lawyers will answer your questions during an initial free, no obligation consultation (either in person or over the phone). This is the best way to determine whether this attorney is someone you’d like to work with.
How to Prepare to Work with a Bankruptcy Lawyer
Take a deep breath and dive into your financial paperwork. Collect it all. Know that for each hour you spend filling out your bankruptcy attorney’s forms, you’ll receive exponential results. Creditor phone calls and threats will stop. You’ll be given a clean slate. You’ll likely get rid of a lot or all of your of debt. You’ll protect your assets. Your income will be freed up to pay the bills you really need to pay.