Indiana Bankruptcy Exemptions

Like all states, Indiana has a set of exemptions you can use to protect some property when filing for bankruptcy, such as a home, car, and retirement account. In this article, you'll learn:

• how long you must live in Indiana before using its exemptions
• whether Indiana exemptions will protect all of your property, and
• what will happen to any property you can't exempt.

If you have more questions, read Filing for Bankruptcy in Indiana. Not only will you find answers, but it includes helpful checklists and a link to an interactive bankruptcy quiz. Or, try the start-to-finish "Filing for Bankruptcy" guide.

How Indiana's Bankruptcy Exemptions Work

You can protect property covered by an exemption regardless of whether you file for Chapter 7 or 13. But each chapter treats nonexempt property—things not covered by an exemption—differently.

• In Chapter 7 bankruptcy, the bankruptcy trustee sells nonexempt property and distributes the proceeds to creditors.
• In Chapter 13 bankruptcy, you keep everything you own. However, you must pay the value of the nonexempt property equity in your repayment plan, or your disposable income, whichever is more.

When You Can Use Indiana's Bankruptcy Exemptions

You can file for bankruptcy in Indiana after living there for over 180 days (or the greater portion of 180 days before filing). But before using Indiana's exemptions, you need to live in Indiana for 730 days before filing for bankruptcy. Otherwise, you'd use the previous state's exemptions.

For example, suppose you weren't living in any one state during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two-year period that immediately preceded your filing. (11 U.S.C. § 522(b)(3)(A).)

Learn more about filing for bankruptcy after moving to a new state and who can and can't file for bankruptcy.

Common Indiana Bankruptcy Exemptions

Use the list below to determine whether you can protect property important to you. Although the federal bankruptcy exemptions aren't available in Indiana, keep in mind that spouses who share an ownership interest in property can double the corresponding exemption. Also, all filers are entitled to:

• use the federal nonbankruptcy exemption list
• protect stimulus payments, tax credits, and child credits using the federal COVID-19 recovery rebate exemption, and
• keep tax-exempt retirement accounts, including 401(K)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans and traditional and Roth IRAs to $1,512,350 per person (valid for bankruptcy cases filed between April 1, 2022, and April 1, 2025). (11 U.S.C. 522(b)(3)(C); (n).)

Learn more about retirement accounts in bankruptcy.

Indiana Bankruptcy Exemption List

Unless otherwise noted, all law references are to the Indiana Code.

Indiana Homestead Exemption

You can protect up to $19,300 of equity in real estate or tangible personal property. Indiana's homestead exemption applies to residential property or tangible personal property (such as a mobile home) that constitutes your personal or family residence. As a result, a homestead in Indiana can include a home, condominium, trailer, or farm.

Spouses who file bankruptcy jointly and co-own a home can double the exemption amount. Also, any interest that the debtor has in real estate held as a tenant by the entirety might be exempt if only one spouse files for bankruptcy (this can be tricky so consider consulting with an attorney). (Ind. Code §§ 34-55-10-2(c)(1), (5).)

Learn more about qualifying for Indiana's homestead exemption and protecting your home in bankruptcy.

Indiana Motor Vehicle Exemption

Indiana does not have a specific motor vehicle exemption, but you can use Indiana's wildcard exemption to protect the equity in your car, truck, van, or another vehicle. Find out about protecting cars in bankruptcy and how the motor vehicle exemption works in a Chapter 7 case.

Indiana Wildcard Exemption

You can protect any nonresidential real estate or tangible property of your choosing up to a value of $10,250. (Ind. Code § 34-55-10-2(c)(2).) You can also protect up to $400 of intangible personal property. (Ind. Code § 34-55-10-2(c)(3).) Learn about the wildcard exemption in bankruptcy.

Other Indiana Exemptions

Pension and Retirement Benefits

The following pensions and retirement benefits are exempt in bankruptcy:

• pension, retirement, or IRA account. (Ind. Code § 34-55-10-2(c)(6).)
• police pension fund (Ind. Code § 36-8-7.5-19.)
• firefighter pension fund (Ind. Code § 36-8-7-22.)
• legislators benefit plan ( Ind. Code (§§ 2-3.5-4-11; 2-3.5-5-9.)
• public employees retirement (Ind. Code § 5-10.3-8-9.)
• Indiana State Teachers' Retirement fund benefits (Ind. Code § 5-10.4-5-14.)

Personal Property

You can exempt the following personal property:

• uniforms, arms, military equipment (Ind. Code § 10-16-10-1.)
• health aids (Ind. Code § 34-55-10-2(c)(4).)
• medical care savings account (Ind. Code §§ 6-8-11-19; 34-55-10-2(c)(7).)
• health savings account (Ind. Code § 34-55-10-2(c)(8).)
• qualified tuition program (Ind. Code § 34-55-10-2(c)(9).)
• education savings account (Ind. Code § 34-55-10-2(c)(10).)
• interest in a refund or earned income credit for exempt bankruptcy property (Ind. Code § 34-55-10-2(c)(11).)
• a spendthrift trust (Ind. Code § 30-4-3-2.)

Insurance Benefits

• fraternal benefit society benefits (Ind. Code § 27-11-6-3.)
• life insurance policies that name the insured spouse, children, dependent relatives, or any creditor as a beneficiary and the proceeds of such policies are exempt from claims against the insured and the insured's spouse; life insurance, mutual life, and accident insurance proceeds, including group policies (Ind. Code §§ 27-1-12-14; 27-1-12-29, 27-2-5-1; 27-8-3-23.)

Miscellaneous Indiana Exemptions

• unemployment compensation benefits (Ind. Code § 22-4-33-3.)
• workers' compensation except for child support claims (Ind. Code § 22-3-2-17.)
• specific partnership property (Ind. Code § 23-4-1-25.)
• lesser of 75% of earned but unpaid wages or 30 times the Federal minimum wage (Ind. Code § 24-4.5-5-105.)

Confirming the Indiana Bankruptcy Exemptions

Indiana's Department of Financial Institutions adjusts state exemption amounts every six years. The next adjustment will be made in 2022. To find the statute itself, check the Indiana General Assembly or consult with a local bankruptcy lawyer. Learn about finding state statutes in Laws and Legal Research.

When You Can Use Indiana Bankruptcy Exemptions

You can file for bankruptcy in Indiana after living there for more than 180 days. However, you must live in Indiana much longer before using Indiana exemptions—at least 730 days before filing, to be exact. Otherwise, you'd use the previous state's exemptions.

But suppose you weren't living in any particular state during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two-year period that immediately preceded your filing. (11 U.S.C. § 522(b)(3)(A).)

Also, to claim the total value of the Indiana homestead exemption, you must have purchased and owned the property for at least 1,215 days before the bankruptcy filing. If you can't meet this requirement, your homestead exemption is limited by federal law to $189,050 (valid for bankruptcy cases filed between April 1, 2022, and April 1, 2025).

Learn more about filing for bankruptcy after moving to a new state and who can and can't file for bankruptcy.

Avoiding Exemption Issues in Indiana

If you don't exempt your property carefully, you could lose the property in bankruptcy. Answers to these questions might help you steer clear of common issues.

Do I automatically get to keep exempt property? Generally, no. Here's the procedure you'll need to follow: You'll select the exemption set that best protects your property, list the exempt assets and applicable exemption laws on Schedule C: The Property You Claim as Exempt, and file it with your other required paperwork.

Will someone check my exemptions? The bankruptcy trustee—the court-appointed official tasked with managing your case—will review Schedule C to ensure that you have the right to protect the claimed property. A trustee who disagrees with your exemptions will file an objection with the court. The judge will decide whether you can keep the property.

Example. Jeff owns a rare, classic car worth $15,000, but the state vehicle exemption won't adequately protect it. Believing that the car qualifies as art—at least in his mind—Jeff exempts it using his state's unlimited artwork exemption. The trustee reviews Schedule C, disagrees with Jeff's characterization and files an objection with the court. After consideration, the judge will likely side with the trustee, determining that the vehicle doesn't qualify as a piece of art.

What if I make a mistake? Most trustees won't file an objection unless it's clear that the debtor is trying to pull something over on the court. At least not without trying to resolve the issue first. If there's a minor exemption problem, the trustee will likely call you to work out the matter informally.

It's worth noting that it's not a good idea to finesse exemptions. Not only do you have an obligation to supply correct information on your bankruptcy forms, but purposefully making inaccurate statements can be considered fraudulent. Bankruptcy fraud is punishable by up to $250,000, 20 years in prison, or both.

Need More Bankruptcy Help?

Did you know Nolo has been making the law easy for over fifty years? It's true—and we want to make sure you find what you need. Below you'll find more articles that explain what bankruptcy is and how bankruptcy works. And don't forget that our bankruptcy homepage is the best place to start if you have other questions!

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.

Updated March 15, 2022