What Are the Indiana Bankruptcy Exemptions?

What Are Bankruptcy Exemptions and Why Are They Important in Chapter 7 Bankruptcy?

Bankruptcy exemptions are laws that help people protect the property they own when they file Chapter 7 bankruptcy. Without exemptions, the bankruptcy trustee would be able to sell property you own and give the proceeds to your creditors. Exemptions are in place to ensure that you can get a fresh start financially without starting over from scratch. They can help you protect personal property, real property (such as a home or land you own), and money benefits (such as retirement accounts or pensions).

This article gives a basic overview of Indiana’s key exemptions. If this feels overwhelming, don’t worry! You may be eligible to use Upsolve’s free filing tool, which will walk you through this process step by step. If you feel more comfortable speaking with a pro, we can also help you get a free consultation with an experienced bankruptcy attorney in your area.

Can You Use Federal Bankruptcy Exemptions Instead?

No. If you’ve been an Indiana resident for at least two years, you’ll be required to use the state’s exemptions when you file your Chapter 7 case.

Every state has bankruptcy exemption laws on the books, and these vary from the federal bankruptcy exemptions. Some states allow bankruptcy filers to choose between state and federal exemptions, but Indiana isn’t one of those states.

When you file bankruptcy in Indiana, you can take advantage of the federal non-bankruptcy exemptions, too. These mostly help people protect retirement accounts and certain government benefits.

If you haven’t lived in Indiana for at least two years, you’ll have to do some research to see which exemption laws apply to you. Read Can I File Bankruptcy After Moving To a New State? to learn more.

What Are Indiana’s Bankruptcy Exemptions?

Indiana’s bankruptcy exemptions fall into three major categories:

• Real property, which includes real estate and land

• Personal property, which includes many things like household goods, tools of the trade, and your car

• Money benefits, which include retirement accounts, government benefits, and money you have in the bank

The exemption amounts listed below apply to an individual filing their case alone (single filers). If you’re married and filing your case jointly, you can double the exemption amounts.

Real Property Exemptions: Indiana Homestead Exemptions

The homestead exemption in Indiana is $22,750.

The Indiana homestead exemption allows you to protect a certain amount of equity in your home. Your home must be your primary residence to use this exemption. 

Equity is the value of your property minus the amount you owe. For example, say you owe $230,000 on a mortgage, and the home is worth $250,000. This means you have $20,000 of equity in the home. In this case, the homestead exemption fully protects your home.

Source: Ind. Code §§ 34-55-10-2(c)(1), (5)

Indiana’s Personal Property Bankruptcy Exemptions

Personal property covers a broad range of items. 

The following items are fully exempt under Indiana law:

• Uniforms, arms, military equipment

• Health aids

• Medical care savings account

• Health savings account

• Qualified tuition program

• Education savings account*

• Interest in a refund or earned income credit for exempt bankruptcy property

• A spendthrift trust

*In Indiana, contributions to education savings accounts (including 529 plans) are fully exempt from bankruptcy if made more than two years before filing. Contributions made between one and two years prior to filing are exempt up to a limit of $5,000. However, contributions made within one year of filing are not exempt.

Source: Ind. Code §§ 10-16-10-1, 34-55-10-2(c)(4), 6-8-11-19; 34-55-10-2(c)(7), 34-55-10-2(c)(8), 34-55-10-2(c)(9), 34-55-10-2(c)(10), 34-55-10-2(c)(11), 30-4-3-2

Indiana’s Wildcard Exemption

Compared to other states, Indiana doesn’t have particularly generous personal property exemptions. Because of that, the wildcard exemption is an important one for Indiana filers. It allows you to protect up to $12,100 of tangible property and/or nonresidential real estate. Examples of tangible property include your TV, phone, jewelry, household goods, furnishings, animals, etc. It also includes your car, if you have one.

This is important because unlike most other states, Indiana doesn’t have a specific motor vehicle exemption.

Money Benefits

Money benefits include things like wages, pension accounts, retirement accounts, and public assistance.

Wages

You can keep up to 75% of your unpaid wages. If this amount is less than 30 times the federal minimum wage, the law allows you to keep the higher amount.

Source: Ind. Code § 24-4.5-5-105

Pensions and Retirement Benefits

Many pension accounts and retirement benefits are fully exempt in bankruptcy in Indiana, including:

• Pension, retirement, or IRA account

• Police and firefighter pension funds

• Legislators benefit plan

• Public employees retirement 

• Indiana State Teachers' Retirement Fund benefits

• Tax-exempt retirement accounts, including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, IRAs, Roth IRAs, ERISA-IRAs, and qualified benefits up to $1,512,350 per person

Source: Ind. Code §§ 34-55-10-2(c)(6), 36-8-7.5-19, 36-8-7-22, 2-3.5-4-11; 2-3.5-5-9, 5-10.3-8-9, 5-10.4-5-14, and 11 U.S.C § 522(b)

Public Assistance

The following public benefits can be exempt up to the full monetary value:

• Workers' compensation

• Earned income tax credit 

• Unemployment compensation

Source: Ind. Code §22-3-2-17, 34-55-10-2(c)(11), 22-3-2-17, 22-4-33-3  

Insurance

The following insurance policies can be exempt up to the full value. Life insurance policies that name the spouse, children, dependent relatives, or any creditor as a beneficiary are exempt from claims. 

• Life insurance policy or proceeds if the beneficiary is spouse or dependent

• Group life insurance policy

• Life insurance proceeds if policy prohibits use to pay creditors

• Mutual life or accident policy proceeds as needed for support

• Fraternal benefit society benefits

• Employer's life insurance policy on an employee

• Crime victims compensation

Need Help Filing Chapter 7 Bankruptcy?

Since bankruptcy is a legal process, it can be overwhelming to understand all the aspects of it, including exemptions. The good news is that help is available. Take Upsolve’s quick screener to see if you’re eligible to use our free filing tool. Upsolve can also help you figure out what other debt-relief options may be useful for your situation.

If you have a tricky bankruptcy case, you may want to hire a lawyer. Most offer free consultations, which you can use to find the right fit and get some of your basic questions answered.