How Does Chapter 13 Bankruptcy Work in Indiana?
Bankruptcy law is designed to assist individuals who have financial trouble and are unable to pay debts. There are three types of bankruptcies, Chapter 7, Chapter 11 and Chapter 13. Under Chapter 13, debtors must repay debts within three to five years. A lawyer is not always required to handle a bankruptcy, however you should know the basics of how a Chapter 13 bankruptcy works in Indiana before filing.
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Chapter 13 Qualifications
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A bankruptcy must be filed in federal court. The federal government has jurisdiction over bankruptcy cases, meaning that Indiana has no legal standing on Chapter 13 issues. There is only one reason the court recognizes for filing a bankruptcy. Bankruptcy is for individuals who want a fresh start by paying off debts and creditors. According to the federal statue, only people with debts of less than $360,000 can file for Chapter 13. Partnerships and corporations cannot file for Chapter 13. In addition, anyone who has had a bankruptcy case dismissed within 180 days of filing for Chapter 13 will be denied.
Credit Counseling and Reporting
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Indiana requires Chapter 13 petitioners to take credit counseling courses with a federally sponsored program. The United States Bankruptcy Court of Indiana does not accept Chapter 13 petitions until proof of credit counseling is provided. Upon acceptance, the court is required to report it to consumer credit bureaus. A Chapter 13 bankruptcy stays on your credit history report for seven years, according to the United States Bankruptcy Court Southern District of Indiana.
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Filing Process
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To begin the Chapter 13 process, the petitioner must file in bankruptcy court. Debtors must file in the district in which they live. In addition, the debtor must file a list of all contact information for lenders, creditors, outstanding balances, any income, liabilities and all assets. The court needs a list of monthly expenses, including clothing, groceries, rent and utilities. As of 2010, Indiana courts charge a filing fee of $235 and a miscellaneous fee of $39.
Exemptions
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Exemptions are one element of bankruptcy law. Exemptions determine the kinds of property that can be kept after a bankruptcy concludes. A bankruptcy trustee appointed by the court sells off all nonexempt property. The Homestead Exemption is the largest home equity exemption---up to $15,000. If your home is worth more than this amount, the trustee must sell your home and give you $15,000 cash. Other exemptions include retirement accounts, pensions, business property, work tools and equipment and savings In addition, in a Chapter 13, the court may supply a "wild card" exemption, in which you are allowed to apply $8,000 to your choice of one piece of property, such as a car or furniture.
Discharging Debts
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All debt-collecting attempts must stop once a bankruptcy petition is filed in court. This is known as a "stay." While the stay is in effect, creditors can't request wage garnishments, bring lawsuits or any other attempts to collect money. Creditors received letters from the court that a bankruptcy has been filed by their debtor. Under a Chapter 13 bankruptcy, petitioners must select a repayment plan and be approved by the court. After approval, the court dismisses debts and creditors can no longer attempt to collect debts. Debts that can't be discharged in bankruptcy court are back child support, mortgages, federal student loans and certain taxes.
Considerations
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Indiana is a common law state. This means that debts are considered to be separate among spouses. In Indiana, you can choose to file separately or jointly under a Chapter 13 bankruptcy. The judge can only dismiss your own debts if you choose to file separately. If you file jointly, both your debt and your spouses's debt are discharged.
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