How to Qualify for Bankruptcy Under Indiana Law
Filing for bankruptcy can be a complex process, especially in Indiana where specific laws and regulations apply. Understanding how to qualify for bankruptcy under Indiana law is crucial for individuals considering this option as a means to achieve financial relief. Below, we outline the essential steps and requirements to qualify for bankruptcy in Indiana.
Types of Bankruptcy in Indiana
In Indiana, individuals typically file for either Chapter 7 or Chapter 13 bankruptcy. Each chapter has its specific eligibility criteria:
- Chapter 7 Bankruptcy: Also known as “liquidation bankruptcy,” it involves the discharge of unsecured debts like credit cards and medical bills. To qualify, you must pass the means test, which compares your income to the median income for a household of your size in Indiana.
- Chapter 13 Bankruptcy: This type allows individuals to reorganize their debts and make repayment plans over three to five years. To qualify, you must have a regular income and unsecured debts that do not exceed $394,725 and secured debts that do not exceed $1,184,200 (as of 2023).
Understanding the Means Test
To qualify for Chapter 7 bankruptcy in Indiana, you must pass the means test. This test evaluates your income over the six months prior to filing. If your average monthly income is below the state median, you automatically qualify. If it is above, you'll need to calculate your disposable income to see if you can afford to repay some of your debts.
Residency Requirements
To file for bankruptcy in Indiana, you must have lived in the state for at least 180 days before filing. If you have moved from another state, you will need to file under that state’s laws if you haven’t established residency in Indiana long enough.
Credit Counseling Requirement
Before filing for bankruptcy, Indiana residents must complete a credit counseling course from a U.S. Trustee-approved agency. This course must be taken within 180 days prior to filing. The purpose is to explore alternative solutions to bankruptcy and ensure that filing for bankruptcy is the most appropriate course of action.
Completing Required Forms and Documentation
This step involves gathering necessary financial documents, including a list of debts, assets, income, and expenses. It's essential to fill out the required forms accurately, as any discrepancies can delay the process or lead to your case being dismissed. All forms must be filed with the bankruptcy court in your district.
Filing Fees
Filing for bankruptcy in Indiana involves certain fees. As of 2023, the filing fee for Chapter 7 is approximately $338, and for Chapter 13, it's around $313. If you cannot afford these fees, you may be eligible to apply for a fee waiver or file an application to pay in installments.
Conclusion
Qualifying for bankruptcy under Indiana law requires understanding the different types of bankruptcy, passing the means test, fulfilling residency requirements, completing credit counseling, and submitting the necessary documentation. By following these guidelines, individuals can navigate the bankruptcy process more effectively and work toward a fresh financial start.