Bankruptcy and Property in Indiana: What Can You Keep?

Bankruptcy is often seen as a step toward financial freedom and a fresh start for many in Indiana. It offers a structured path for individuals and families to navigate their financial challenges — including credit card debt, medical bills, and other unsecured obligations.

At Brock Legal LLC, one frequent question we encounter from our Central Indiana clients is, “What will happen to my property if I file for bankruptcy?” Fortunately, Indiana bankruptcy exemptions clearly define which assets can be protected under bankruptcy in Indiana, allowing individuals to retain essential property while resolving debt.

Let’s explore how Indiana’s laws, including Code 34-55-10-2, safeguard property and what that means for homeowners, renters, and business owners navigating the bankruptcy process.

Bankruptcy in Central Indiana: The Basics

Before focusing on property protection, it’s essential to understand the fundamentals of bankruptcy in Indiana. There are two main types of personal bankruptcy: Chapter 7 and Chapter 13.

Chapter 7 bankruptcy, or “liquidation,” involves selling non-exempt assets to pay debts.

Chapter 13 bankruptcy, or “reorganization,” allows individuals with steady income to repay part of their debt over time through a structured plan.

Both processes require attending a 341 meeting of creditors, where you’ll answer questions from your bankruptcy trustee about your finances, assets, and exemptions. The type of bankruptcy you file determines how your real estate and personal property are treated.

Understanding Indiana’s Bankruptcy Exemptions: Safeguarding Your Assets

Bankruptcy exemptions exist to shield certain assets from liquidation. These exemptions are designed to protect your real estate, vehicles, and personal belongings from being sold during bankruptcy.

For Chapter 7 filers, exemptions define what you can keep while the trustee handles remaining non-exempt property. Many filers retain most, if not all, of their possessions under Indiana bankruptcy exemptions.

For Chapter 13 filers, exemptions determine how much debt you must repay under your court-approved repayment plan. Since you keep your property in Chapter 13, exemptions help reduce what you owe to creditors.

Indiana also does not use the federal exemption system, meaning residents must claim exemptions allowed by state law. The most significant statute, Indiana Code 34-55-10-2, outlines protections for both real estate and personal property.

Why the Increase in Exemptions?

The Indiana Department of Financial Institutions (IDFI) adjusts exemption limits every six years based on inflation, referencing the Consumer Price Index from the U.S. Department of Labor.

Because of recent inflation and rising costs, the IDFI raised exemption limits effective March 1, 2022. These updates ensure that Hoosiers retain essential property including real estate and personal items even as living expenses rise.

Which Assets are Protected?

Before diving into the exemption values, it’s crucial to understand the two main categories of Indiana bankruptcy exemptions:

1. Homestead (Real Estate) Exemption:
   Protects the equity in your primary residence, whether a home, condo, or mobile home. This does not extend to rental properties or vacation homes.
2. Personal Property Exemption:
   Covers tangible items such as vehicles, clothing, furniture, and electronics. It also includes intangible assets like savings accounts, tax refunds, or inheritances.

Under Indiana Code 34-55-10-2, these protections ensure that debtors can maintain basic living needs and avoid total liquidation during bankruptcy.

For example, many clients retain homes, vehicles, and essential household items while eliminating or reorganizing medical bills and other unsecured debt.

Navigating Bankruptcy with a Trusted Indiana Bankruptcy Lawyer

Bankruptcy laws in Indiana can be complex, especially when dealing with real estate, exemptions, and court deadlines. Working with a knowledgeable Indiana bankruptcy attorney ensures you maximize your exemptions, comply with state and federal bankruptcy code requirements, and protect as much of your property as possible.

Your attorney will:

• Guide you through the 341 meeting process.
• Help you determine which exemptions under Code 34-55-10-2 apply to your home, car, and other property.
• Clarify how federal exemption limits compare to Indiana’s state system.
• Advise whether Chapter 7 or Chapter 13 bankruptcy better fits your financial goals.

At Brock Legal LLC, we ensure every client understands their rights, exemption options, and how to retain essential property through either Chapter 7 liquidation or Chapter 13 reorganization.

Bankruptcy and Property FAQs

What Happens to My Property If I File for Bankruptcy in Indiana?

In Indiana, certain assets are protected through state exemptions under Code 34-55-10-2. Your property outcome depends on whether you file for Chapter 7 or Chapter 13 bankruptcy.

What Are the Main Types of Personal Bankruptcy in Indiana?

The two primary types of personal bankruptcy in Indiana are Chapter 7, which involves liquidating non-exempt assets to pay debts, and Chapter 13, which reorganizes debt into a repayment plan.

How Do Bankruptcy Exemptions Work in Indiana?

Bankruptcy exemptions in Indiana protect specific assets up to a certain value from being seized in bankruptcy, with different exemptions applying to tangible and intangible assets.

Can I Keep My House if I File for Chapter 7 Bankruptcy in Indiana?

Yes, you can protect your home’s equity up to a certain limit through the homestead exemption, but the exemption does not apply to secondary residences or rental properties.

What Personal Property Is Exempt in Indiana Bankruptcy?

The personal property exemption in Indiana covers a variety of tangible items such as vehicles, household goods, clothing, and intangible assets like bank account funds and tax refunds.

How Often Are Bankruptcy Exemption Limits Updated in Indiana?

The Indiana Department of Financial Institutions updates bankruptcy exemption limits every six years to reflect inflation, with the most recent update effective from March 1, 2022.

How Does Filing for Chapter 13 Bankruptcy Affect My Property in Indiana?

In Chapter 13 bankruptcy, you consolidate your debts into a repayment plan and retain your property, with exemptions reducing the amount you need to repay to creditors.

Why Should I Consult a Bankruptcy Lawyer in Indiana?

Consulting with an experienced bankruptcy lawyer in Indiana is crucial as they can guide you through the complexities of bankruptcy laws, help maximize your exemptions, and advise on the best course of action for your specific situation.

What Can I Expect When Working with Brock Legal LLC for My Bankruptcy Case?

At Brock Legal LLC, you can expect compassionate and expert guidance through your bankruptcy journey, with a commitment to helping you retain as much property as possible and providing a free and confidential consultation.