Eligibility Criteria for Chapter 13 Bankruptcy in Indiana

Navigating the financial waters of life can sometimes lead us to challenging crossroads. While facing such moments, it’s crucial to remember that you’re not alone, and there are structured paths designed to help you regain your footing. Chapter 13 bankruptcy, often referred to as the “wage earner’s plan,” offers one such path. At Brock Legal LLC, we often guide our clients through this process, ensuring they are equipped with the necessary information. This article aims to shed light on the eligibility criteria for Chapter 13 bankruptcy in Indiana, ensuring you clearly understand your options under the bankruptcy code.

Chapter 13 Bankruptcy in Indiana: An Overview

Chapter 13 bankruptcy in Indiana allows individuals with a regular income to propose a payment plan to repay all or part of their debts over a set period. Unlike Chapter 7 bankruptcy, where assets might be liquidated to pay creditors, Chapter 13 allows debtors to retain their property and make structured payments under the supervision of the bankruptcy court.

This form of bankruptcy is especially valuable for those looking to prevent foreclosures or repossessions, offering them a chance to catch up on missed payments. Once the court approves the plan, creditors must comply with its terms until the Chapter 13 case concludes.

Eligibility Criteria for Chapter 13 Bankruptcy: What You Need to Know

To be eligible for Chapter 13 bankruptcy, certain technical criteria must be met:

• Steady Income: You must have a consistent source of income. This holds true whether you’re self-employed or running an unincorporated business.
• Individual or Joint Filers: Eligibility is limited to individuals or married couples filing jointly, not to businesses or partnerships.
• Unsecured Debt Ceiling: Your unsecured debts must be below $465,275, though this limit is adjustable according to 11 U.S.C. § 109(e) of the bankruptcy code.
• Secured Debt Ceiling: Your secured debts must not exceed $1,395,875, a figure also subject to adjustments as per 11 U.S.C. § 109(e).
• No Recent Bankruptcy Dismissals: There should be no dismissed bankruptcy case in the past 180 days for failure to comply with court orders or voluntary dismissals following a creditor’s motion to lift the automatic stay.
• Credit Counseling Completion: You must have finished credit counseling with an approved agency.

Is Chapter 13 Bankruptcy Right for Me?

Filing for Chapter 13 bankruptcy might be a viable option if you:

1. Own property or have a permanent residence in the United States.
2. Haven’t declared bankruptcy under Chapter 7 in the past four years or Chapter 13 in the last two years.
3. Meet the eligibility requirements and can demonstrate sufficient disposable income to fund a Chapter 13 plan.

Filing for Chapter 13 may be advisable if you:

1. Have steady income but find yourself getting deeper into debt.
2. Own non-exempt assets that you wish to keep, such as high real estate equity, vehicles, or other monetary assets.
3. Are behind on vehicle payments and want to avoid repossession.
4. Are at risk of losing your home due to foreclosure or eviction.
5. Need to prevent utility disconnections.
6. Are faced with lawsuits, wage garnishments, or bank freezes.
7. Have student loans that are causing significant financial hardships.

Chapter 13 might not be the best route if:

1. You doubt your ability to adhere to a repayment plan.
2. You expect your income to increase significantly within the next three to five years.
3. You qualify for Chapter 7 bankruptcy, and you own relatively few non-exempt assets.

Cost of Filing for Chapter 13 Bankruptcy in Indiana

The costs associated with Chapter 13 bankruptcy vary depending on personal circumstances and whether you hire an attorney. Court-mandated fees include:

1. The filing fee.
2. An administrative fee.
3. A trustee surcharge.

These fees are in the ballpark of $300 and may be periodically updated. They are comparable to those for filing Chapter 7 bankruptcy court.

The attorney fee to file a Chapter 13 bankruptcy case can range between $3,000 to $6,000, based upon the complexity of the debtor’s situation, as well as the total timeframe to complete the bankruptcy. This fee can typically be paid up front, or as part of the monthly Chapter 13 repayment plan, depending on the preference of the debtor and the attorney.

Moreover, the payment plan itself represents a cost based on income, total debt, and priority obligations like taxes debts or child support.

The Value of Legal Guidance in Central Indiana’s Bankruptcy Terrain

Navigating Chapter 13 Indiana eligibility might seem straightforward but involves several layers of legal and financial detail. Having a skilled foreclosure or bankruptcy attorney on your side ensures you meet all procedural requirements, protect your assets, and maximize relief available under Indiana bankruptcy laws.

At Brock Legal LLC, our attorneys help clients understand every stage of the process — from preparing documentation to ensuring the court approves the repayment plan and, ultimately, that you receive a discharge once your obligations are met.

Opting for Brock Legal means partnering with a team that goes beyond the legal framework. We provide hands-on support, strategic insight, and clear guidance to help clients navigate their bankruptcy case successfully.

FAQs on Eligibility Criteria for Chapter 13 Bankruptcy in Indiana

What are the key eligibility requirements for filing Chapter 13 bankruptcy in Indiana?

You must have a regular source of income, whether from employment, self-employment, or an unincorporated business. You should be an individual or a joint filer with your spouse, not a business entity. Your unsecured debts must be under $465,275, and secured debts should not exceed $1,395,875. Additionally, you should not have had a bankruptcy case dismissed in the last 180 days for noncompliance and must have completed credit counseling in accordance with the bankruptcy code before filing in the bankruptcy court.

Can I file for Chapter 13 bankruptcy in Indiana if I own a business?

If you own a business, you can file for Chapter 13 bankruptcy as an individual or jointly with your spouse, provided the debt limits are within the set boundaries and the business is not incorporated. This type of chapter 13 case helps small business owners reorganize dischargeable debts through a structured payment plan approved by the bankruptcy court.

Is Chapter 13 bankruptcy the right choice for me if I’m at risk of losing my home or car?

Yes, filing Chapter 13 bankruptcy can be a suitable option if you are behind on mortgage or vehicle payments and wish to prevent foreclosure or repossession by catching up on overdue payments through a Chapter 13 plan. This allows the court approves repayment plan to include missed taxes debts or arrears and helps you protect your assets.

How often can I file for Chapter 13 bankruptcy in Indiana?

There is no absolute limit on the number of times you can file, but you need to wait at least two years from your last Chapter 13 case. However, strategic considerations about the timing and whether you have received a discharge in a prior bankruptcy case should be discussed with an experienced foreclosure or bankruptcy attorney like Zach Brock.

What are the costs involved in filing for Chapter 13 bankruptcy?

Costs include court-mandated fees around $300, which cover the filing fee, administrative fee, and trustee surcharge required by the bankruptcy court. Attorney fees vary and can range from $1,000 to over $5,000, depending on various factors such as the complexity of your chapter 13 case. You will also need to account for the repayment plan itself, which is based on your income and disposable income available for creditors.

What happens if I can’t adhere to the Chapter 13 repayment plan?

If you fail to follow the Chapter 13 plan, you may face potential risks such as loss of assets and the ability for creditors to resume collection actions against you. Therefore, it’s essential to consider your ability to commit to the payment plan before filing and consult with a bankruptcy attorney about modifying the plan under the bankruptcy code if your financial situation changes.

Can filing for Chapter 13 bankruptcy in Indiana affect my student loans?

While student loans are generally non-dischargeable debts, filing Chapter 13 bankruptcy can sometimes help manage student loan payments through a Chapter 13 plan. In rare cases, if you can prove undue hardship, you may be able to discharge student loan debt, though this depends on the bankruptcy court and how it interprets the bankruptcy code provisions for dischargeable debts.

Why should I consult with an attorney before filing for Chapter 13 bankruptcy?

Attorney Zach Brock can provide expert guidance on whether Chapter 13 bankruptcy in Indiana is the best option for your financial situation, help you understand how your bankruptcy case fits under the bankruptcy code, and ensure that your Chapter 13 plan and payment plan are approved by the court. Working with a knowledgeable foreclosure and bankruptcy attorney increases the likelihood that your court approves repayment plan and that you successfully receive a discharge at the end of your case.