One fear Indianapolis residents might have about filing for bankruptcy is that they will have to turn over all of their property for sale so that they can pay their debts.
While it is possible that someone who files for Chapter 7 bankruptcy may have to surrender some of their property, they are also allowed to claim many different types of property as exempt.
Whether an Indiana resident is eligible for an exemption will depend on his circumstances, so specific questions should be directed to an experienced bankruptcy attorney.
However, the basic idea is that once a debtor validly claims an exemption, the bankruptcy trustee cannot force the sale of the property. An exemption does not, however, prevent a creditor for claiming its mortgage or lien to which the debtor previously agreed.
Indiana debtors should be familiar with common bankruptcy exemptions
Indiana law allows debtors in this state to claim several common types of property as exempt.
For example, a person’s retirement plan, such as a 401(k) is exempt. In other words, a person will not have to worry that bankruptcy will mean losing her important retirement savings.
Likewise, a person can claim up to $15,000 in equity in their homes. If a married couple is filing jointly, they can claim up to $30,000 in equity.
Indiana residents also get an exemption of up to $8,000, or $16,000 for married couples, in what is called tangible property, that is, things like cars, personal furnishings and the like. They also can claim up to $300, or $600 as a married couple, with respect to intangible personal property, such as bank accounts.
