Understanding Exemptions

• One of the vital components of a bankruptcy case is the calculation of exemptions. Exemptions determine what property you may keep after bankruptcy. The bankruptcy trustee will sell any of your property that is not exempt. Indiana state law determines the types and amount of exemptions that you may claim in bankruptcy. Unlike in many other states, in Indiana you are not allowed to choose the federal exemptions; you must use the Indiana state exemptions.
  
  

Indiana Exemptions

• Indiana state law provides numerous property exemptions. The biggest exemption is the Homestead Exemption worth up to $15,000 in home equity. If you have more than $15,000 in home equity, the bankruptcy trustee will sell your home and give you the $15,000 cash.
  
  Other important Indiana exemptions include certain business property, retirement accounts and pensions, money in health savings accounts and certain work tools and equipment. Finally, Indiana allows you to claim $8,000 in a "wildcard" exemption, which means you get to choose what property it applies to. For example, you could apply it to a car, household furnishings or anything else.
  
  

Courthouse

• Indiana is home to eight different bankruptcy courts. Generally, the courts are divided on a Northern/Southern distinction, and then located in various large cities within those locations. There are four courts in the Northern area and four Courts in the Southern area. To find the court for your location, use the "Court Locator" link provided in the Resources section.
  
  

Marriage Laws

• Indiana is a common law property state, as opposed to a community property state. In a common law property state like Indiana, each spouse can incur separate debts that are not the debts of the other spouse. Alternatively, the spouses can incur joint debts.
  
  When you file for bankruptcy in Indiana, you can choose to file separately from or jointly with your spouse. If you file jointly, the bankruptcy will wipe out all debts of either spouse, whether separate or joint. But if you file separately, your bankruptcy will only wipe out your separate debts and any debts that are considered joint. Your separate bankruptcy will not affect your spouse's separate debts in Indiana.
  
  

Eligibility

• To qualify for Chapter 7 bankruptcy, your income generally must be less than the Indiana state median income. The Indiana median income, as of 2008, is $39,384 for a single person or $69,718 for a family of four. If your income is less than that, you automatically qualify for Chapter 7. But if your income is more than the Indiana state median income, then you will probably need to hire an attorney to see if you can qualify for Chapter 7 under the complicated "means test."