Asset Exemption Increases for Indiana Bankruptcy Filings
There are a lot of misconceptions when it comes to filing for bankruptcy. For example, our clients commonly ask us, “If I file for bankruptcy, what property or assets am I allowed to keep?“. Of course, keeping your personal property, especially your primary home, after bankruptcy is an understandable concern. So important to be reassured that the equity in your home, family vehicles, furniture, clothing, and other personal items may all be eligible for either state or federal exemption. Our experienced Terre Haute bankruptcy attorneys can advise you about what assets you can keep. Also, due to new Indiana laws, asset exemption increases have increased.
What is Chapter 7 bankruptcy?
A Chapter 7 Bankruptcy is a liquidation bankruptcy that allows most people to completely wipe out their unsecured debt, such as medical debt, credit card debt, personal loans, and collection debt. When you file for Chapter 7 bankruptcy, you can usually keep your primary home and car. However, they must be and remain current on their monthly payments.
To qualify for Chapter 7 bankruptcy, you must meet the following requirements;
- Have not filed Chapter 7 bankruptcy in the last eight years.
- Also, one must pass an income test called “the means test.” The means test uses the median income for your household size and expenses based on the IRS living standards.
What type of personal property assets are protected in a Chapter 7 bankruptcy?
Under Indiana law, many individuals filing for bankruptcy can keep personal and even intangible personal property.
Here are the three main exemptions;
- Homestead exemption – Homestead exemptions protect a certain amount of equity within one’s primary or family residence.
- Personal property exemption – Any personal property can be considered a personal property exemption.
- General intangible exemption – Intangible exemption includes money on deposit in the debtor’s bank account, money owed to the debtor from a third party, unreceived tax refunds, inheritances, lawsuit proceeds, etc.)
2022 asset exemption increases: how to keep more of your assets during bankruptcy filings
Due to the most recent changes in the law in Indiana in early 2022, the value of the assets a debtor is allowed to keep when filing for bankruptcy has been adjusted to increase the value of a debtor’s exempted personal property. Every six years Indiana Department of Financial Institutions (IDFI) adjusts the allowable exemption amounts as inflation also rises.
The adjusted increase will affect the following three types of assets; personal or family residence, other real estate or tangible property, and intangible personal property.
The amounts of the increase are as follows:
- Personal property or family residence – an increase of 15.5% (previously $19,300), now $22,750.
- Other real estate or tangible property – an increase of 18% (previously $10,250), now $12,100.
- Intangible personal property – (previously $400), now $450.
For married couples who are filing jointly in bankruptcy, these property exemptions may be doubled. For joint filings, the new property exemptions amounts would be the following;
- Personal property or family residence – $45,500
- Other real estate or tangible property – $24,200
- Intangible personal property – $900
These updated asset exemptions will stay in effect until at least 2028. It’s also important to note that creditors cannot liquidate these exempted assets to satisfy debts included in a bankruptcy filing in Indiana.
Filing for bankruptcy can be a powerful tool to help you get your life back on track. An experienced Terre Haute attorney will provide you with a free case evaluation to assist your situation, answer all your questions about bankruptcy, and advise you on what assets you can keep. In addition, we will help you decide which bankruptcy solution is best for you.
Get your life back, and let our Terre Haute law firm help you file for bankruptcy.
At Rowdy G. Williams Law Firm, we are committed to ensuring that our clients can overcome the difficult legal obstacles they may not be prepared to face without help. Your case is our case.
If you are faced with bankruptcy, contact us for a free consultation, or simply give us a call at 812-232-7400. We are here to listen and provide the support and guidance you need.