Bankruptcy Attorney Indiana: Chapter 7 vs 13, Exemptions & Means Test (2026)
Confronting debt, wage garnishment, or foreclosure in Indiana? This guide covers Chapter 7 versus Chapter 13, Indiana's opt-out exemptions under IC 34-55-10-2, the homestead and its inflation-indexed amounts, Means Test thresholds, and the two federal courts that serve the state.
Navigating Debt Relief in the State of Indiana
From Indianapolis and Fort Wayne to Evansville and the Region, medical bills, layoffs and business setbacks can push Indiana households into debt they cannot manage. Federal bankruptcy law offers a lawful path to discharge debt or restructure it into an affordable court-supervised plan.
Working with an experienced Indiana bankruptcy attorney is especially valuable here because Indiana is an opt-out state with no standalone vehicle exemption: filers cannot use the federal exemption list and must rely on IC 34-55-10-2, whose dollar amounts are reset by Department of Financial Institutions rule every six years.
Chapter 7 vs. Chapter 13: Choosing the Right Path
Chapter 7: Fresh Start Liquidation
Often called straight bankruptcy, Chapter 7 discharges qualifying unsecured debts such as credit cards, medical bills and personal loans in roughly 3 to 5 months. Because Indiana has no separate vehicle exemption and a modest homestead, filers with meaningful home or vehicle equity should have an attorney review what a trustee could reach before filing.
- Discharges unsecured debts within roughly 90–120 days
- Requires passing the Means Test
- No mandatory debt repayment plan
Chapter 13: Wage Earner Restructuring
Designed for individuals with steady income who exceed Chapter 7 limits, owe non-dischargeable debt, or need to cure mortgage arrears. Chapter 13 sets a 3- to 5-year repayment plan, letting Indiana homeowners stop foreclosure, catch up on missed payments, and keep equity above the exemption limits by paying creditors its value over time.
- Curbs mortgage defaults and can stop a foreclosure sale
- Consolidates obligations into one monthly payment
- Protects non-exempt property that would otherwise be sold
Indiana's Opt-Out Exemption System
Indiana is an opt-out state under 11 U.S.C. § 522(b)(2) and IC 34-55-10-1: federal exemptions are unavailable and Indiana statutes decide what property is protected. The statute states base dollar figures, but the amounts in force come from a Department of Financial Institutions rule (750 IAC 1-1-1) readopted every six years, so confirm the figures for your filing date with an attorney.
Homestead Exemption (IC § 34-55-10-2)
Indiana's homestead exemption protects up to $22,750 of equity in a primary residence under the current Department of Financial Institutions rule (750 IAC 1-1-1); the statute's base figure is $15,000. Spouses who hold the home as tenants by the entirety can each claim it. Homes acquired within 1,215 days of filing can also be subject to the federal cap in 11 U.S.C. § 522(p).
Personal Property & Other Exemptions
Indiana's exemptions (IC § 34-55-10-2) include up to $12,100 in other real estate or tangible personal property, which filers typically apply to a vehicle, household goods and similar items because Indiana has no standalone vehicle exemption, and $450 in intangible personal property such as cash and bank deposits. Prescribed health aids, many retirement plans and certain benefits are also protected.
Key Indiana Bankruptcy Statutes & Rules
| Statutory Element | Indiana Rule & Federal Code |
|---|---|
| Exemption System | 11 U.S.C. § 522(b)(2) and IC § 34-55-10-1: Indiana is an opt-out state; filers use Indiana exemptions under IC § 34-55-10-2. |
| Homestead Exemption | IC § 34-55-10-2 and 750 IAC 1-1-1: $22,750 of equity under the current rule (statutory base $15,000), re-indexed every six years. |
| Personal Property Exemptions | IC § 34-55-10-2: $12,100 other real estate or tangible personal property (no standalone vehicle exemption), $450 intangibles, health aids, and retirement accounts. |
| The Automatic Stay | 11 U.S.C. § 362: halts foreclosure sales, repossessions, lawsuits and wage garnishments on filing. |
| Means Testing Period | 11 U.S.C. § 707(b): six-month historical income compared against Indiana median income. |
| Mandatory Credit Counseling | 11 U.S.C. § 109(h): briefing from a UST-approved agency within 180 days before filing. |
Source: Indiana Code § 34-55-10-2; 750 IAC 1-1-1; U.S. Bankruptcy Code (Title 11). Dollar limits are adjusted periodically — confirm current figures with a licensed Indiana attorney.
Indiana Federal Bankruptcy Courts
Indiana has two federal bankruptcy districts: the Northern District (South Bend, Fort Wayne, Hammond, Lafayette) and the Southern District (Indianapolis, Evansville, New Albany, Terre Haute), assigned by county of residence. Use the city links below to find attorneys near you:
Frequently Asked Questions: Indiana Bankruptcy
Can I use federal bankruptcy exemptions in Indiana?
No. Indiana is an opt-out state under 11 U.S.C. § 522(b)(2) and IC 34-55-10-1, so residents must use the Indiana exemptions in IC 34-55-10-2. An attorney can map your home equity, vehicle, retirement accounts and personal property against those limits.
How much home equity does the Indiana homestead exemption protect?
Under IC 34-55-10-2 and the current Department of Financial Institutions rule (750 IAC 1-1-1), the homestead exemption protects up to $22,750 of equity in a primary residence. The statute's base figure is $15,000, and the rule re-indexes the amounts every six years, with the next adjustment due by March 1, 2028. Spouses holding the home as tenants by the entirety can each claim it.
How does the Means Test determine Chapter 7 eligibility in Indiana?
The Means Test compares your average gross household income over the six months before filing against the Indiana median income for your household size. At or below the median, you generally qualify for Chapter 7. Above it, a second calculation of IRS-allowed expenses determines whether you have enough disposable income that Chapter 13 may be required.
How does the automatic stay protect Indiana debtors?
Under 11 U.S.C. § 362, filing a bankruptcy petition triggers an immediate injunction called the automatic stay. It halts collection calls, pending wage garnishments, lawsuits, foreclosure sales and vehicle repossessions as soon as the petition is filed, subject to the Bankruptcy Code's exceptions.
Which federal bankruptcy court handles my Indiana case?
Indiana has two federal bankruptcy districts: the Northern District (South Bend, Fort Wayne, Hammond, Lafayette) and the Southern District (Indianapolis, Evansville, New Albany, Terre Haute). Your case is filed in the district that covers your county of residence.
Can taxes and student loans be discharged in a Indiana bankruptcy?
Income taxes can be discharged in Chapter 7 or Chapter 13 only if they satisfy the federal 3-2-240 rule (return due at least 3 years before filing, filed at least 2 years before, assessed at least 240 days before, and no fraud). Most federal and private student loans remain non-dischargeable absent a showing of undue hardship, and domestic support obligations are never discharged.
Related Legal Resources Near Indiana
Bankruptcy Attorney Illinois Guide
Compare Indiana's opt-out approach with neighboring Illinois.
Bankruptcy Attorney Ohio Guide
See how neighboring Ohio handles homestead and personal property exemptions.
Bankruptcy Attorney Michigan Guide
Review another Great Lakes state's exemption framework.
Bankruptcy Attorney Tennessee Guide
Compare Indiana's indexed amounts with Tennessee's opt-out limits.
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