If you have reached the point where you simply cannot pay your debts and have fallen several months behind on credit card and other debt payments, you may be able to file for Indiana bankruptcy protection. Before you do, learn what the laws entail.

Bankruptcy Exemptions

Indiana bankruptcy law protects certain assets from the courts, even when you file bankruptcy. These include:

• Up to $8,000 in real property
• Up to $300 in intangible property value
• Up to $15,000 in value for your home
• Retirement plan
• Public employee pensions
• Medical care savings account money
• Public compensation programs
• Benefits from fraternal benefit society
• Equipment for National Guard
• Life insurance payments for beneficiaries who are your spouse or dependents
• Group life insurance policies
• Mutual life or accident policy proceeds
• Life insurance proceeds if a clause prohibiting the use to pay creditors is included in policy
• Business partnership property
• 75 percent of any unpaid but already earned wages

For Indiana residence, there is no exemption for your vehicle. You can either claim it as your real property exemption or reaffirm the debt with a secured lender if you still owe money on the vehicle. Otherwise, the car can be taken and sold to pay your debts.

Chapter 7 Bankruptcy Information

If your income is at or below the median income in your state, which allows you to pass the means test, you can file Chapter 7 bankruptcy. This form of bankruptcy wipes out most debts after taking non-exempt assets and selling them in an attempt to pay some of the debt. Types of debts that cannot be erased under Chapter 7 include alimony, child support, some back taxes, recent cash advances over $825, and student loans. Also, if you recently charged a large amount for luxury goods, it may be viewed as an attempt to perform bankruptcy fraud, and you may still be responsible for those debts.

Chapter 13 Bankruptcy Information

If you have failed the means test or have some loans you actually want to bring current so you can keep the property, Chapter 13 bankruptcy is ideal. Under this structure, you work with the courts to restructure your debt so you can realistically pay it, preferably within three to five years. Payment is then made to the bankruptcy trustee, who distributes it to the creditors according to the repayment plan.