A Short Guide to Indiana Bankruptcy Law
Filing for personal Indiana bankruptcy requires that individuals have undergone some form of approved credit counseling. This must have occurred no earlier than 180 days before Indiana bankruptcy filing and must have resulted in a certificate that can be given to an Indiana bankruptcy judge proving that counseling occurred. For a list of approved counselors, visit here.
If you are filing for corporate bankruptcy, know that you must by law obtain legal representation to assist you with filing. Residents aren’t required to hire an Indiana bankruptcy lawyer to file for personal bankruptcy, but most filers find them necessary. Those individuals who cannot afford an attorney should contact a pro bono service that provides legal assistance to needy bankruptcy filers. Visit here for a list of such programs.
Filing for Bankruptcy
There are U.S. Bankruptcy Court locations in Indianapolis, Terre Haute, Evansville and New Albany for the Southern District of Indiana, and in Fort Wayne, Hammond, Lafayette, and South Bend for the Northern District.
Please come to court with all of your petition papers properly filled out and ready to pay the filing fee. It is $306 for Chapter 7, $1046 for Chapter 11, and $281 for Chapter 13.
A great many forms need to be properly filled out before you can file for Indiana bankruptcy, far too many to name here. On average there are 30 forms, and they differ depending on the type of bankruptcy you are filing for. Once you’ve decided the type of bankruptcy appropriate to your concerns, visit here to find both the local Indiana and the federal forms.
Corporate Indiana Bankruptcy
Here are the two most common ways for businesses to file for Indiana bankruptcy:
• Chapter 11: An attractive feature of Chapter 11 Indiana bankruptcy is that it pauses all debt payments while court visits are made and a decision is reached regarding a feasible future debt payment schedule. Meanwhile, the business owners stay in possession of all the business’s assets which cannot be repossessed, so that operations can continue and revenue generated.
• Chapter 7: If Chapter 11 is intended for businesses that may soon be profitable, Chapter 7 is intended for businesses that are unlikely to ever reach those levels of revenue. It requires the court to sell off assets owned by the company and then use the resulting money to pay off creditors. Any debt not raised in this process the business is still liable for, so few businesses reemerge after filing for Chapter 7 Indiana bankruptcy.
Personal Indiana Bankruptcy
Most of the same types of Indiana bankruptcy that are available to businesses are available to individuals, and vice-versa. The only restrictions are which entities may apply based on asset levels. It is difficult, for instance, for an individual to have high enough assets and debt to qualify for Chapter 11 bankruptcy, though this does occasionally occur. Here are the two most common types of personal Indiana bankruptcy, though keep in mind that others do exist:
• Chapter 7: The individual filing Chapter 7 Indiana bankruptcy loses possession of most of their assets, excluding some items such as clothing, appliances or possible an automobile, which are sold to pay off debt. Though this process is similar to corporate Chapter 7, personal Indiana bankruptcy law maintains that an individual is not liable for debts not raised during the liquidation process, unlike with businesses, so that it’s easier for a person to become financially successful after filing for Chapter 7 than a business.
• Chapter 13: Individuals commonly seek out this form of Indiana bankruptcy if they are not eligible for Chapter 7 because their income is above the Indiana mean income and they’d don’t qualify under the Indiana Means Test. The court works with the individual to make a plan for how to pay back creditors within five years using the filer’s discretionary income.
The Tax Debt Problem
Unfortunately, Indiana bankruptcy offers few tools to assist individuals who are suffering financial difficulties because of tax debt. If you fall into this category, you should contact an Indiana bankruptcy attorney right away to discuss the options available to you.