Filing Chapter 7 bankruptcy provides numerous Indiana residents with debt relief. But the filing process also involves the liquidation of particular kinds of personal property.
Fortunately, the vast majority of Chapter 7 filers are able to retain all of their property while also discharging their debts. That being said, some forms of personal property can be subject to seizure for certain filers.
If you’re considering filing for Chapter 7 bankruptcy, you need to know what types of property may be vulnerable, and how you may be able to keep all of your possessions.
Indiana Chapter 7 Bankruptcy Exemptions
When filing for Chapter 7 bankruptcy, you can protect certain forms of property from the risk of liquidation.
Indiana features a homestead exemption that allows you to protect up to $22,750 in your home’s equity or in personal property that’s considered your residence, such as a trailer or mobile home. Additionally, you can double the exemption amount if a spouse co-owns the home.
One important note is that this exemption is specifically meant for residential property. You can’t use this exemption to retain equity in a property that you’re renting out or otherwise not residing in.
Indiana does not offer a specific exemption for vehicles, but you can protect your vehicle with the personal property exemption. This exemption allows you to protect up to $12,100 per person worth of tangible personal property or nonresidential real estate.
Indiana allows people to keep up to $450 per person in intangible property> Intangibles are things that are money or that represent money. This includes money in bank accounts as of the date of filing, tax refunds, rights to inherit, and claims against parties for damages.
In addition to these valuable exemptions, there are also a number of accounts and benefits that are protected in Indiana including:
- Retirement, pension, and IRA accounts
- Firefighter pension funds
- Police pension funds
- Legislator benefit plans
- Public employee retirement accounts
- Health savings accounts
- Medical care savings accounts
- Spendthrift trusts
- Indiana State Teachers’ Retirement fund benefits
- Fraternal benefit society benefits
- Certain life insurance policies
- Unemployment compensation benefits
- Workers’ compensation
Indiana residents can also exempt other personal property including:
- Military equipment, arms, and uniforms
- Health aids
- Specific partnership property
Ways to Keep Your Nonexempt Property During Chapter 7 Bankruptcy
Any property that isn’t exempt can be liquidated during the Chapter 7 bankruptcy filing process. Some types of property that the court-appointed trustee may seize include artwork, vehicles, nonresidential property, musical equipment, investments, and other valuable assets.
Fortunately, there are ways in which you can keep most, if not all, of your property.
Firstly, the most important possessions you own are probably your home and your car. With the homestead exemption, you can only protect up to $22,750 of your home’s equity. So if you own more equity in your home, the trustee could sell your property, and the profits above $22,750 would be used to pay off creditors.
If you have non-exempt assets, it is possible to avoid liquidation by using Chapter 13 instead or Chapter 7. In a Chapter 13 you would be required to pay creditors what they would have received had you gone into a Chapter 7. You keep all of your stuff, pay creditors over a 3 to 5 year plan, and get a discharge on the unpaid portion of most types of debts at the end of a your plan.
Finally, you can also buy back nonexempt property from a trustee. For example, if your car is worth $15,275 and you protect $10,275 of it with the wildcard exemption, you can offer the trustee $5,000 so that you can keep it. In order to pay the trustee, you can get a loan from a friend or relative, use money that you made after filing, or you can sell some of your exempt personal property.
Contact Indiana Chapter 7 Bankruptcy Lawyers
If you’re considering filing for Chapter 7 bankruptcy, don’t go it alone. Contact Indiana Chapter 7 bankruptcy lawyers to assist you with this often-complex and difficult process. For bankruptcy legal support in Indiana, contact Sawin & Shea, LLC. Speak with an associate today at 317-759-1483, or you can schedule a FREE case consultation online here.