This is the first question nearly every bankruptcy client asks, and the honest answer for most Indiana families is no, you keep your house and your car. Here is why.
Indiana’s exemptions protect what you need
When you file, state law lets you protect, or “exempt,” a set amount of equity in your property. Indiana’s exemption amounts are adjusted for inflation every few years and currently protect a meaningful amount of equity in your home, a separate amount in other personal property including vehicles, and essentially all of your qualified retirement accounts. Health aids, certain insurance benefits, and most public benefits are protected in full.
Equity means what the property is worth minus what you owe on it. Most families owe close to what the house or car is worth, so their equity fits inside the exemption and nothing happens to the property.
Chapter 7: keep paying, keep the property
In a Chapter 7, you keep your house and car as long as you keep making the payments on them and the equity is within your exemptions. You can also surrender a vehicle you cannot afford and walk away from the loan, which is sometimes the better choice.
Chapter 13: the tool for catching up
If you are behind on your mortgage or car loan, Chapter 13 is designed for exactly that. The filing stops the foreclosure or repossession immediately, and the missed payments are spread over a three-to-five-year plan while you resume regular payments. At the end of the plan the arrears are paid, the remaining unsecured debt is discharged, and you still own the home.
The automatic stay
The moment either chapter is filed, the automatic stay takes effect. Creditor calls, wage garnishments, lawsuits, foreclosure sales, and repossessions all stop. Violating the stay has consequences for the creditor, and most of them know it.
What we do before you file
We run the numbers on every asset against the exemptions before anything is filed, so there are no surprises. If something is at risk, we tell you, and we talk about whether Chapter 13 or a different timing solves it. Bad things can happen to good people. The point of the bankruptcy code is to give you a way out that lets you keep what you need to rebuild.
This article is general information about Indiana law, not legal advice about your situation. Laws change and every case is different. Talk to a lawyer about the facts of your case.