What Property Can You Keep in Chapter 7 and Chapter 13 Bankruptcy in Indiana?

One of the biggest fears people have when considering bankruptcy is losing everything. Many Indianapolis residents assume that filing means giving up their home, car, savings, and personal belongings. That is rarely the case. The real answer to what property you can keep in bankruptcy depends on the type of bankruptcy you file and how Indiana’s exemption laws apply to your situation.

Both Chapter 7 and Chapter 13 bankruptcy allow you to protect certain assets. Understanding which assets are protected is critical before filing. You will want to speak with an Indiana bankruptcy attorney to make sure your property is properly protected under applicable exemptions. 

The key is understanding how exemptions work and how trustees evaluate property under Chapters 7 and 13.

Chapter 7 bankruptcy is often called liquidation bankruptcy, but that term can be misleading. Most individuals who file in Indianapolis and surrounding counties keep all of their personal property because Indiana exemptions protect essential assets.

In many cases, Chapter 7 bankruptcy allows individuals to discharge unsecured debt while retaining qualifying personal property. 

Indiana Property Under Chapter 7 and Chapter 13 Exemptions

Indiana law allows filers to protect specific categories of property. These commonly include:

• Homestead equity: Indiana provides a homestead exemption that protects a certain amount of equity in your primary residence. If your equity falls within the exemption limit, you can usually keep your home.
• Motor vehicles: A vehicle exemption protects equity in one or more vehicles up to a statutory amount. Many Indianapolis filers keep their cars as long as payments are current or equity is within limits.
• Household goods and furnishings: Furniture, appliances, clothing, and everyday items are generally protected as long as they are reasonably valued.
• Retirement accounts: Most qualified retirement plans, including 401k accounts and certain pensions, are fully protected under federal law.
• Public benefits: Social Security, unemployment benefits, and disability payments are typically exempt.

Knowing what you can keep in bankruptcy helps filers understand how property exemptions protect essential assets during the process. 

The trustee reviews your assets carefully. Proper valuation and correct application of exemptions make a significant difference.

Chapter 13 works differently from Chapter 7. Instead of liquidating non-exempt property, you enter into a court-approved repayment plan that lasts three to five years.

For those with regular income or valuable assets, Chapter 13 bankruptcy can be an effective way to protect property through a court-approved repayment plan. 

In Chapter 13, you generally keep all of your property. However, the value of non-exempt assets can affect how much you must pay unsecured creditors through your plan.

How Property Under Chapter 7 and Chapter 13 Is Treated Differently

Here is how property treatment typically differs:

• The trustee may sell non-exempt property in Chapter 7 if it exceeds exemption limits.
• Non-exempt property in Chapter 13 is not sold, but you must pay creditors at least the value of that non-exempt amount over time.
• Secured property, such as homes and vehicles, can often be retained in both chapters if payments are maintained or included in a plan.

The choice between chapters depends heavily on your assets, income, and long-term goals. A detailed review of your financial situation is essential before making a decision.

Homeownership is often the most emotional issue in bankruptcy. Many families in Indianapolis, Carmel, Fishers, and Greenwood worry about foreclosure or losing hard-earned equity.

Indiana’s homestead exemption protects a portion of equity in your primary residence. If your equity falls within that limit, you can usually keep your home in Chapter 7. In Chapter 13, you may also use the repayment plan to catch up on missed mortgage payments and stop foreclosure.

Certain tax obligations can impact which assets are protected, making tax resolution assistance an important consideration when evaluating bankruptcy options. 

If you are behind on property taxes or have IRS liens, those issues must be addressed carefully.

For a deeper explanation of asset protection, you can review this breakdown of bankruptcy and property in Indiana.

Vehicles are critical for commuting to work and caring for family. Fortunately, many filers keep their cars in both Chapter 7 and Chapter 13.

In Chapter 7, if your vehicle equity falls within Indiana’s exemption limit and you are current on payments, you can typically keep it. In Chapter 13, you may be able to include past due payments in your plan and prevent repossession.

Common Personal Property That Is Protected

Most personal property is safe if valued correctly and within exemption limits:

• Clothing and personal effects: Everyday clothing and necessary personal items are rarely at risk.
• Tools of the trade: If you rely on certain tools or equipment for your profession, they may be protected under Indiana exemptions.
• Bank account funds: Limited amounts may be exempt depending on the source and timing.
• Life insurance and certain cash value policies: Some policies provide protection based on their structure and beneficiary designations.

To better understand the process from start to finish, you may find helpful information in this step-by-step guide for Indiana residents. 

Correct valuation is essential. Trustees look at fair market value, not replacement cost.

Small business owners in Central Indiana often worry about equipment, inventory, or accounts receivable. The answer depends on the business structure and the total value of its assets.

If you operate as a sole proprietor, business assets are part of your personal bankruptcy estate. Indiana exemptions may protect some tools or equipment, but high-value assets may require careful planning.

In Chapter 13, business owners can often continue operating while repaying creditors through a plan. This structure allows you to maintain control of equipment and revenue streams while reorganizing debt.

Speaking with a bankruptcy attorney in Indiana helps ensure exemptions are applied correctly based on local rules and trustee expectations.

If you are considering bankruptcy in Indianapolis or surrounding communities, understanding what property you can keep in Chapter 7 and Chapter 13 bankruptcy in Indiana is essential before taking the next step.

Every case is different. Exemptions must be applied correctly, assets must be valued accurately, and trustees expect complete transparency. A small mistake can have serious consequences.

Brock Legal, LLC has helped individuals and families across Central Indiana protect their homes, vehicles, retirement accounts, and personal belongings while eliminating overwhelming debt. You deserve clear answers and practical guidance.

Understanding which assets are protected is critical before filing. Speak with an Indiana bankruptcy attorney to make sure your property is properly protected under applicable exemptions.

If you are ready to explore your options, contact Brock Legal, LLC today and take the first step toward financial relief.