How To File for Bankruptcy in Indiana
- Before filing for bankruptcy, you'll have to take a credit counselling course.
- Indiana residents must file for bankruptcy in one of Indiana's federal bankruptcy courts.
- Indiana law will determine the types of exemptions you can use to protect your personal property during bankruptcy.
If you’re dealing with garnishment, foreclosure, medical bills, or other financial difficulties, you might be looking for a way to deal with your debts. Bankruptcy can help.
This article answers common questions about filing for bankruptcy in Indiana. However, navigating the complicated rules around bankruptcy is a daunting task. For the best outcome, you should seek legal advice from an Indiana bankruptcy attorney.
How Does Bankruptcy Work?
Bankruptcy can give you debt relief and a financial fresh start. However, there are some trade-offs. A Chapter 7 bankruptcy will wipe out your debt, but your property could be sold to pay your creditors. A Chapter 13 bankruptcy can substantially reduce your debts, but you’ll still have to make monthly payments on the remaining debts.
When you file for bankruptcy, two important things happen. First, the court will order an automatic stay. The automatic stay forces creditors to stop foreclosure, repossession, lawsuits, and other actions immediately.
The court will also assign you a bankruptcy trustee. Forty days after you file, the trustee must hold a meeting of creditors. With Chapter 13, the trustee will use this meeting to evaluate your proposed repayment plan. With Chapter 7, the trustee will review your assets and determine if any property should be sold.
Do I Have To Meet any Income Requirements To File Bankruptcy in Indiana?
Yes. Chapter 7 filers must pass a “means test” to prove they have limited income. The test first looks at your monthly income over the past six months and then doubles it. If this annual income estimate is below the median income for a similarly-sized family in Indiana, you pass. If your income is above the median, you can still file for Chapter 7 if you prove that your expenses and debts far outweigh your income.
Unlike Chapter 7, Chapter 13 doesn’t have any income limits. However, Chapter 13 does limit how much debt you can have. Currently, you can’t have more than $465,275 inunsecured debt or $1,395,875 in secured debt.
What Documents Should I Collect Before I File for Bankruptcy?
It can be helpful to gather critical financial documents in one place before you file for bankruptcy. Your bankruptcy lawyer will probably ask for these at your first meeting, so you’ll want to be ready. Documents to collect could include:
- Recent bank statements and pay stubs
- Credit card bills
- Tax returns from the past few years
- Any judgments entered against you
- Student loan paperwork
- Documents concerning child support or alimony
- Car loan or mortgage paperwork
Do I Have To Complete Any Legal Requirements Before I File for Bankruptcy?
Yes. Before filing for bankruptcy, you must attend a mandatory credit counseling course. You’ll have to pick a course approved by the bankruptcy trustee’s office in your district. You can find a searchable list of approved credit counseling courses on the U.S. Trustee Program’s website.
How Do I File for Bankruptcy in Indiana?
The bankruptcy process begins when you file the “Voluntary Petition for Individuals Filing for Bankruptcy.” This form asks for identifying information such as your name, address, and Social Security number. You’ll also use this form to choose between Chapter 7 and Chapter 13.
When you turn in the bankruptcy petition, you must submit other forms that give the trustee and the court a better view of your financial situation. For example, you might need to fill out forms regarding your monthly income and expenses. You can find free bankruptcy forms on the U.S. Courts website. Your bankruptcy attorney can help you determine which forms apply to your situation.
How Much Does it Cost To File for Bankruptcy?
Bankruptcy filing fees depend on the type of bankruptcy that you choose. Current filing fees are $313 for Chapter 13 and $338 for Chapter 7.
If you can’t afford the fee, you can ask for help. You can request a payment plan in either Chapter 7 or Chapter 13. If you’re filing Chapter 7 and meet certain income requirements, you can ask the court for a fee waiver.
Where Do I File for Bankruptcy in Indiana?
You’ll have to file your case in a federal bankruptcy court.
Indiana has six bankruptcy courts located in Evansville, Fort Wayne, Hammond, Indianapolis, New Albany, and South Bend. You’ll have to file in the court that governs the area where you live. There’s a helpful search tool on the U.S. courts website, but bankruptcy residency requirements can be tricky, so you’ll want to speak to an attorney.
To file your bankruptcy case in one of Indiana’s bankruptcy courts, you must live in Indiana for at least 91 days before your filing.
Will Indiana Law Affect My Bankruptcy?
Some portions of the federal bankruptcy code defer to state law. Exemptions are one of these areas.
Exemptions protect your property during bankruptcy. Remember, in a Chapter 7 bankruptcy, the trustee can sell your property. However, if you can prove that your property qualifies for an exemption, the trustee cannot sell it. Chapter 13 excludes your exempt property when the trustee decides how much you’ll pay toward your debts each month.
Some states let their residents choose between state exemptions and federal exemptions. But Indiana law says that Indiana residents must use Indiana’s exemptions. Your attorney can tell you more about using Indiana exemptions to protect your property.
Need More Information About Indiana Bankruptcy?
Indiana bankruptcy can be very complicated. A mistake could cause you to lose precious property or face an impossible monthly payment. Luckily, you don’t have to handle your bankruptcy alone. Use LawInfo to find an Indiana bankruptcy attorney near you.