Many people who are struggling financially because of a job loss or unexpected medical expenses rely on bankruptcy to resolve their financial woes. Bankruptcy provides a discharge opportunity that eliminates the need to repay certain unsecured debts if someone completes their filing successfully. Bankruptcy also temporarily protects someone from collection activity by granting them safeguards via an automatic stay.
Chapter 7 bankruptcy is typically the fastest way for someone to go from their initial paperwork filing to the discharge of their unsecured debts. However, many people call Chapter 7 bankruptcy a “liquidation” process because some of a filer’s personal assets could potentially be sold by the trustee who has been assigned to their case.
Although most people avoid having any of their assets sold to repay their creditors, the possibility exists if someone owns assets that cannot be classified as exempt.
Exemptions protect specific assets
The federal bankruptcy code includes numerous exemptions, and state law features similar provisions. Unless someone only recently moved to Indiana, they will typically be subject to Indiana state code when filing for bankruptcy within the Hoosier State.
Unfortunately, Indiana state law does not allow anyone to use federal exemptions. They can only use Indiana bankruptcy exemptions. The available exemptions include:
- $19,300 in home equity
- $10,250 in wildcard exemptions
- pension accounts and retirement savings
- health aids
- health and educational savings accounts
- special benefits like workers’ compensation and unemployment benefits
The wildcard exemption can help protect intangible assets or a vehicle. Property that exceeds those exemptions will potentially be subject to liquidation as someone moves forward with their Chapter 7 filing. The trustee who is assigned to their case will review an inventory of their assets to determine if any property liquidation is warranted before the discharge of someone’s debts can be ordered.
Proper financial review is crucial during bankruptcy
The more carefully someone struggling with their finances reviews their situation, the better their chances of arriving at a solution that will truly resolve their debt issues. Learning more about the rules that apply to Chapter 7 bankruptcies in Indiana with the assistance of an experienced legal professional can benefit those who are concerned about their current financial circumstances.