Bankruptcy & Indiana
Federal bankruptcy law doesn't differ too much from state to state. However, some state law does decide several significant aspects of filing for bankruptcy. For example, Indiana law determines which people are eligible to file for Chapter 7, but not for Chapter 13 bankruptcy. You don't always have to hire a bankruptcy attorney in Indiana; however, you should know the basics of the law before filing.
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Bankruptcy Exemptions
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Bankruptcy exemptions are one component of the law. Exemptions determine the types of property you can keep after a bankruptcy resolution. Property not exempt is sold by a bankruptcy trustee. Indiana law determines the type and amount of exemptions you can claim. Unlike in other states, Indiana law forbids individuals from claiming federal exemptions; you are only allowed to select Indiana exemptions.
Indiana Exemptions
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Indiana law grants many property exemptions. The Homestead Exemption is the largest, for home equity up to $15,000. If your home is worth more, the trustee must sell your home and give you $15,000 in cash. Other exemptions include business property, pensions and retirement accounts, medical savings and work equipment and tools. Indiana also allows individuals a "wild card," or a choice of what property to apply an $8,000 exemption to. For instance, you may choose to apply this exemption to your car or a family heirloom.
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Eligibility
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Your income needs to be less than Indiana's median income in order to qualify for Chapter 7 bankruptcy. As of 2010, the state's median income is $40,683 for single and $70,621 for family. You automatically qualify for Chapter 7 if your income is less than that. However, if your income is at or above these limits, you must hire an Indiana attorney to help you file for eligibility under Chapter 7 bankruptcy.
Ineligible Debts
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Some debts can never be included in a bankruptcy case. The United States Bankruptcy Court Southern District of Indiana states that alimony, child support, court fines and fees associated with criminal activity charges are ineligible. In addition, most student loans and back taxes are not discharged in bankruptcy cases. Yet, according to the book "How to File for Chapter 7 Bankruptcy," some judges discharge school loans for disabled students. Also, if you local, state or federal taxes are behind three years or more, some Indiana courts may forgive these debts.
Marriage Laws
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Indiana is not a community-property state but instead is a common-law state. In a common-law property state, debts can be considered separate between spouses. In a community-property state, spouses acquire shared debts. In the state of Indiana, you can choose to file separately or jointly from your spouse during a bankruptcy. If you choose to file separately, the judge can only dismiss your debts and not your spouse's. On the other hand, a joint bankruptcy can wipe out each spouse's debt at once.
Credit Counseling and Reporting
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Indiana requires petitioners for bankruptcy to take credit counseling with a federally sponsored organization. The United States Bankruptcy Court of Indiana will not accept a bankruptcy filing until proof of the course completion is provided. Once accepted, Indiana court officials must report it to credit consumer bureaus. According to the United States Bankruptcy Court Southern District of Indiana, a Chapter 7 bankruptcy stays on your credit history for 10 years and a Chapter 13 stays on your credit report for seven years.
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