If you don’t live in or near Indiana, you may only have a vague picture of a state with miles of farmland that hosts the annual Indianapolis 500 auto race. In fact, Indiana is filled with attractions and boasts diverse industries.
A discussion of Indiana’s charms would not be complete without a mention of Brown County, a destination spot where tourists stay days at a time for theater, musical events, hiking and boutique-hopping. Some prefer to visit Indiana’s historical sites, including the Benjamin Harrison Presidential Site and the Connor Prairie Interactive History Park, which reconstructs an 1836 prairie town. And for relaxation, Indiana has a great outdoor scene, like Marengo Cave and the Indiana Dunes State Park.
On the economic side, Indiana was ranked 35th for per capita personal income (PCPI) at $43,492, which is 88% of the national average, in 2016. However, the PCPI grew 3.6% from 2015 to 2016, which is a greater increase than the national average of 2.9%. The largest industry in the state is durable goods manufacturing, which makes up 16% of Indiana’s GDP. However, this industry only saw a 0.5% grow from 2015 to 2016.
Of course, as in the rest of the nation, many in Indiana find it necessary to file bankruptcy. Nearly 23,000 residents filed bankruptcy in 2016, according to statistics from the Northern and Southern districts.
Let’s explore what you need to know about bankruptcy exemptions if you are one of these filers in Indiana.
The Basics of Chapter 7 Bankruptcy in Indiana
When an individual files for bankruptcy, it’s usually under Chapter 7, which is liquidation bankruptcy, rather than under Chapter 13, which is reorganization bankruptcy. Chapter 7 bankruptcies are primarily governed by federal law under Title 11 of the U.S. Code. If you are filing under Chapter 7, you need to know that a bankruptcy trustee may sell some of your property in order to help pay your debts. However, some property is exempt, and thus safe from the bankruptcy trustee.
In order to come out of a Chapter 7 bankruptcy in the best position possible, therefore, you must be very clear what property is exempt and therefore safe, and what property is non-exempt and subject to sale by the bankruptcy trustee. Some laws put a value limit on the extent to which your property may be exempt. This limit applies to your equity in the property rather than the value of the property in its entirety.
Filing for bankruptcy is a big step. If you are considering it, it would be wise to contact an Indiana bankruptcy attorney to discuss your options.
Indiana Bankruptcy Exemptions: Can I keep my property?
The U.S. Bankruptcy Code provides a list of exemptions, but each state can also establish their own list of exemptions. Now here’s the key: some states allow filers to choose whether to use the federal or state exemptions, and others insist that filers use the state exemptions. These latter states are known as “opt-out” states, and this is where Indiana falls. If you file in Indiana, you must use the Indiana bankruptcy exemptions and may not use the federal exemptions — except for some specific federal exemptions that you may use in conjunction with the state exemptions.
If you are married and file a joint bankruptcy with your spouse, you can double the exemption amount for any property as long as you both have an ownership interest.
Let’s take a look at some of the important Indiana exemptions. Please note that these amounts may change regularly, so it’s important to consult with an Indiana bankruptcy attorney before you file to determine your best use of exemptions.
Indiana Bankruptcy ExemptionsThe top 5 exemptions under Indiana state law.
|Type of exemption||Indiana law|
|Homestead||$19,300, doubled if married|
|Personal property||Intangible personal property up to $400, plus health aids; a $10,250 wildcard exemption can be applied to any tangible personal property or nonresidential real estate|
|Vehicle||None, but filers can apply the wildcard exemption|
|Wages||75% of earned but unpaid disposable weekly income, or 30 times the federal hourly minimum wage|
|Pension/retirement||The portion the filer contributed to his or her retirement account is exempt; public employee pensions plus benefits for lawmakers and teachers also are exempt|
Indiana Homestead Exemption
Under Ind. Code §34-55-10-2(c)(1), Indiana gives you a homestead exemption in the amount of $19,300 for your home or principal residence. This can be doubled for married filers. Any interest in real estate held as a tenant by the entirety also is exempt, unless both owners are bankrupt.
Fraternal benefit society benefits are 100% exempt under Ind. Code § 27-11-6-3.
Life insurance policies that name the insured spouse, children and dependent relatives are exempt under Ind. Code §§ 27-1-12-14; 27-1-12-29, 27-2-5-1; 27-8-3-23.
There is no motor vehicle exemption in Indiana. However, you can use the wildcard exemption (addressed below) to protect your car.
Pension and Retirement Benefits
- Retirement plans for the portion the debtor contributed are exempt under IC 34-55-10-2(c)(6)
- Pensions for public employees are exempt under Ind. Code § 5-10.3-8-9.
- Benefit plans for legislators and retirement benefits for teachers are exempt under Ind. Code §§ 2-3.5-4-11; 2-3.5-5-9; 5-10.3-8-9; 5-10.4-5-14.
- Pension fund for firefighters and police are exempt under Ind. Code §§ 36-8-7.5-19; 36-8-7.5-22.
You are allowed to exempt intangible personal property up to $400 under Ind. Code § 34-55-10-2. All health aids are exempt under Ind. Code § 34-55-10-2(c)(3).
Unemployment and Workers’ Compensation
Unemployment compensation benefits are exempt until received by the debtor under Ind. Code § 22-4-33-3. All workers’ compensation benefits are exempt except for child support claims under Ind. Code § 22-3-2-17.
Indiana’s wage garnishment law (Ind. Code Ann. § 24-4.5-5-105) is a minimum 75% of earned but unpaid weekly disposable earnings, or 30 times the federal hourly minimum wage. A judge may authorize a higher amount for low-income earners.
Indiana gives you a wildcard exemption you can use for any tangible personal property or nonresidential real estate up to $10,250 under Ind. Code §34-55-10-2(c)(2).. As previously mentioned, this may be used for a motor vehicle.
Indiana Bankruptcy Courts: Where are they located?
Most people who file for bankruptcy don’t need to attend court or appear in front of a judge. However, they may need to if a bankruptcy trustee objects to one of their exemptions.
In Indiana, the bankruptcy courts are divided into two districts: Northern and Southern. Click each link below to find out where you may file for Chapter 7 bankruptcy in Indiana.
Terre Haute: United States Courthouse, 921 Ohio St., Terre Haute, IN 47807, not staffed