The Basics of Filing for Bankruptcy in Indiana

Filing for bankruptcy can be a daunting process, but understanding the basics can help simplify the steps involved. If you're considering filing for bankruptcy in Indiana, here’s what you need to know.

Types of Bankruptcy in Indiana

In Indiana, individuals generally file for Chapter 7 or Chapter 13 bankruptcy. Chapter 7 is often referred to as liquidation bankruptcy, where non-exempt assets may be sold to pay off creditors. On the other hand, Chapter 13 is a reorganization plan that allows individuals to keep their assets while they repay debts over three to five years.

Eligibility Requirements

To qualify for Chapter 7 bankruptcy, you must pass the Means Test, which evaluates your income against the median income in Indiana. If your income is below the median, you may qualify for Chapter 7. If it’s above, you might need to consider Chapter 13 instead.

For Chapter 13, you must have a regular income to make monthly payments. Additionally, there are limits on the amount of unsecured and secured debt you can have.

The Bankruptcy Filing Process

The bankruptcy filing process begins with gathering financial documents, which include income statements, tax returns, and information on your debts and assets. You must complete a credit counseling course from an approved provider within 180 days before filing for bankruptcy.

Next, you’ll need to file your bankruptcy petition with the appropriate court in Indiana, along with schedules detailing your financial situation. Once you file, an automatic stay goes into effect, preventing creditors from pursuing collections against you.

The 341 Meeting

After filing, you will be required to attend a 341 meeting, also known as the Meeting of Creditors. During this meeting, a bankruptcy trustee will ask you questions about your financial status and the information provided in your petition. Creditors may also have the opportunity to ask questions, though they often do not attend.

Debt Discharge and Repayment Plans

In Chapter 7 cases, the court may discharge your unsecured debts if you meet specific requirements. This means you are no longer legally obligated to pay these debts. In Chapter 13 bankruptcies, you'll create a repayment plan, and upon successful completion, your remaining qualifying unsecured debts can be discharged.

Impacts on Credit

Filing for bankruptcy will have a significant impact on your credit score, and the bankruptcy will remain on your credit report for up to 10 years for Chapter 7 and 7 years for Chapter 13. However, many individuals find that their credit can improve after bankruptcy as they work towards rebuilding their financial standing.

Legal Assistance

Though not required, hiring a knowledgeable bankruptcy attorney in Indiana can make the process smoother. An attorney can help you understand your options, prepare necessary paperwork, and advocate for your rights throughout the bankruptcy process.

Conclusion

Filing for bankruptcy in Indiana is a serious decision, but it can provide a fresh start for those struggling with overwhelming debt. By understanding the types of bankruptcy, eligibility requirements, and the filing process, individuals can navigate their financial challenges more effectively.