In Indiana, it is important to know how much of a house you can keep in bankruptcy. This is especially important in Chapter 7 bankruptcy because this amount determines whether or not the Trustee may want to examine your house. You can only keep a limited amount of value in your house when you file Chapter 7.
The house value amount that protects your residence in Indiana is currently $19,300 per person. This amount also generally doubles to $38,600 if you are married and both spouses are on the deed to the house. Therefore, if you have much more “equity” in your house than the $19,300 per person amount, you may have a problem filing for Chapter 7 bankruptcy.
For instance, pretend your house has $100,000 mortgage on it. In such a case, you would prefer not to have a value of more than $119,300. If your home was worth much more than $119,300, you could have a problem with the bankruptcy trustee. Remember, the amount you can go over your equity is $19,300 per person. If you go much higher than this amount, then you could have a problem with the Trustee assigned to your case.
In some rare cases with married homeowners, you can protect all of your home. You can exceed the $19,300 amount. In such cases, you may even be able to protect your house even if it is completely paid in full. However, there are four requirements. The first requirement for these rare cases is that you must be married. The second requirement is that you must own the house as “tenants in entirety” or as “married persons” on your deed.
You must meet the first and second requirements, being married and having the right deed language. However, you must also meet two more requirements. The third requirement is that only one spouse can be filing for bankruptcy. The fourth requirement is that neither spouse can share any debts. Only one spouse can be filing for bankruptcy and you cannot have any joint debts. Remember, also that medical debts can be considered joint debts even if the debt is only listed in one person’s name.
As a final note, Chapter 13 in Indiana always lets you keep your house. You will have to do a repayment plan, however, for Chapter 13. In most cases, the payment plan can be affordable. Remember, there is almost always a way to keep your house in bankruptcy. It is important to get a good bankruptcy attorney to make plans to protect your house.