Indiana allows debtors to exempt assets when filing for bankruptcy up to a certain monetary amount, and that amount recently increased. When filing, you are allowed to exempt a portion of your home’s equity, tangible personal property, and intangible personal property.
In this blog, we’ll share the details regarding this exemption increase, the different exemption categories, and how these exemptions impact Chapter 7 and Chapter 13 bankruptcy.
What Are Bankruptcy Exemptions?
Bankruptcy exemptions refer to tangible or intangible assets protected from seizure when you file for bankruptcy.
If you’re filing for Chapter 7 bankruptcy, you can retain exempt assets and protect them from seizure but only up to a particular point. The court-appointed bankruptcy trustee can confiscate any non-exempt assets to liquidate in order to pay back some of your debts. That said, the majority of those who file for Chapter 7 bankruptcy are able to keep all of their possessions.
In Chapter 13 bankruptcy, you pool your debts into a three-to-five-year repayment plan, and you get to keep your property. These exemptions still apply because they decrease the amount that you’ll need to pay back to creditors with your repayment plan.
Why Did Bankruptcy Exemptions Increase in Indiana?
Last year, the Indiana Department of Financial Institutions (IDFI) increased the bankruptcy exemption amounts. This is standard procedure, as the IDFI updates the allowable exemption amount every six years to reflect inflation.
How the IDFI calculates this increase is through the United States Department of Labor’s Consumer Price Index for All Urban Consumers. The economic disruption caused by the COVID-19 pandemic and other factors surged inflation rates, and the IDFI adjusted bankruptcy exemptions to keep pace with new rates. These exemptions went into effect on March 1, 2022.
What Assets Are Exempt When Filing for Bankruptcy?
Before we dive into the new exemption amounts, it’s worth noting these different exemption types. The two main exemptions you can expect when filing for bankruptcy are the homestead exemption and wildcard exemption.
The homestead exemption allows for debtors to protect their home’s equity, and this applies to either residential property or personal property that’s used as a residence, such as a trailer. It’s important to note that the homestead exemption will not protect your equity in a secondary residential property, such as a rental or lake house.
The personal property exemption protects a certain amount of tangible and.The tangible assets could include equity in secondary residential property, a vehicle, household items, furniture, clothing, jewelry, or any other personal property.
The intangible assets exemption looks at cash or cash equivalents and include money in a debtor’s bank account, inheritance, tax refunds, claims against others, or any other non-physical asset.
2023 Bankruptcy Exemptions Indiana
The new bankruptcy exemption amounts in Indiana are:
- Homestead Exemption: The amount of protected equity increased from $19,300 to $22,750.
- Wildcard Tangible Asset Exemption: You can exempt tangible property that’s worth up to $12,100, an increase from $10,250.
- Wildcard Intangible Asset Exemption: You can now protect up to $450 in intangible personal property while the previous amount was only $400.
2023 Married Filing Jointly Bankruptcy Exemptions
You should note that the exemption amounts above apply to individual debtors. Those married and filing jointly can exempt twice the amount, meaning:
- Homestead Exemption: $45,500
- Wildcard Tangible Asset Exemption: $24,200
- Wildcard Intangible Asset Exemption: $900
Are There Any Other Bankruptcy Exemptions in Indiana?
In addition to these new exemption amounts, you may have other exemptions, including different types of benefits, accounts, and personal property.
- Personal Property: Includes health aids, spendthrift trusts, tuition programs, education savings accounts, and military uniforms and equipment.
- Benefits: Indiana protects retirement benefits, which can include pensions, IRA accounts, retirement funds, and other types of retirement benefit plans.
- Insurance: Insurance policies and benefits are exempt, including fraternal society benefits and life insurance policies in which the debtor’s children, spouse, or dependent relatives are beneficiaries.
- Miscellaneous: Other protected assets include unemployment benefits, some partnership properties, workers’ compensation, and a percentage of unpaid wages.
Contact an Indianapolis Bankruptcy Lawyer
Facing bankruptcy is a daunting prospect, and the process can be incredibly confusing. To ensure that you file correctly and receive the maximum exemptions, consider contacting a bankruptcy attorney who will assist you through the process.
If you’re considering filing for bankruptcy in Indianapolis or surrounding counties, contact the lawyers at Sawin & Shea, LLC. We’ll untangle the complexities of filing for bankruptcy and will help you get your finances back on track so that you can eventually live debt free. Plus, we’ll help you deal with conflict that arises from your financial situation, such as creditor harassment.
You can schedule a free consultation today by calling 317-759-1483 or by contacting us online here.