Indiana Bankruptcy Laws: What are the laws regarding bankruptcy in the State of Indiana?
Bankruptcy is a situation that anyone can face in their lives. There are various scenarios, ranging from medical to failed businesses or natural disasters that could lead people bankrupt. Although if you happen to find yourself in a situation where you are in debt and owe money to the people you have borrowed from, then finances may become a problem for you.
The person who owes the money is called the ‘debtor,' as they are in debt. The person or people to whom the money is owed are known as ‘creditors.' There are situations where collectors may harass a debtor or use a collection agency to reclaim the amount they are owed. Filing for bankruptcy can immediately prevent creditors from harassing you. Bankruptcy laws encompass federal and state laws, and therefore all citizens of the United States must abide by its terms.
What are the bankruptcy laws in Indiana?
There are two main kinds of bankruptcy laws that you need to be aware of if you are thinking of filing for bankruptcy in Indiana.
- Chapter 7: If you file for a Chapter 7 bankruptcy, then your debt can be discharged, and you will be free from credit collection. There is no repayment plan. Your property, possessions, and assets will be seized and either sold off or auctioned to pay off your debt. There is no need to fear to lose all your property – there are certain assets which will be exempt, and you will be allowed to keep for yourself. There are certain eligibility criteria you must meet to apply for Chapter 7 bankruptcy. One of these is that your income must not be very high and you should not be the owner of a large number of properties or assets.
- Chapter 13: If you file for a Chapter 13 bankruptcy, then you are signing up for a repayment plan where you are expected to pay back your debt in full. In this kind of bankruptcy, you do not lose your property or assets, and they are not liquidated to pay off your debts. To apply for Chapter 13 bankruptcy, you must first show that you have enough income to repay your debts under a repayment plan. A judge will review your application, and if permission is granted, then you will be provided with a plan indicating the terms of your repayment. The amount you pay according to the installment goes to a trustee. The trustee then provides that amount to the creditor. People filing for Chapter 13 bankruptcy are expected to pay back their creditors in full. It is also possible that you will have to provide your disposable income to the creditors for a period of up to five years provided you have not been able to stick to your repayment plans.
Why you should file for bankruptcy
Declaring bankruptcy can help you reinstate your financial situation. It allows the governments – federal and state laws – to step in and provide you assistance. Creditors will no longer be able to disturb and harass you, and places of employment or public agencies cannot act against you either. The state of Indiana does not follow community-property laws. Hence when applying for bankruptcy, you cannot also be held liable for your spouse's debts unless they volunteer to assume them. A way in which they can do this is if both of you sign the same loan. If residency laws in Indiana stop you from filing for bankruptcy under the state's laws, then you can instead apply under federal regulations.