Chapter 13 cases are on the rise in Indiana. Many of these cases are on the rise proportionally only. The ratio of Chapter 13 versus Chapter 7 is much higher than normal. Chapter 13 cases are especially being filed due to the increase in home values.
Home values have caused many Indiana residents to file Chapter 13. These same people would normally choose Chapter 7 for debt relief. Chapter 7 is becoming less and less available to homeowners due to Indiana’s limited home exemption.
Although Indiana’s residence exemption is designed to increase with inflation, it could not keep up with increasing home values. Home values have risen to an almost 100% increase in the last 5-6 years in certain areas. The inflation index only showed an approximate 15% increase for the same period. When Indiana’s exemption was raised to $22,750 per person recently, it was not nearly enough to protect homeowners the same way that it has worked in the past.
These Indiana homeowners are now frequently choosing to file Chapter 13. The risk of having their home affected is much lessened through Chapter 13. You cannot lose your home. Your home is not assessed as a serious asset in Chapter 13. In Chapter 13, you simply pay back the value difference of your home through your Chapter 13 plan.
Chapter 13 is offering better solutions for many Indiana residents right now. For some, this is because they are barred from filing Chapter 7 due to a recent filing. Others are only looking for a short or long-term reorganizing of debts. Most people are only thinking about lowering their payments right now instead of long-term debt relief. Chapter 13 is more affordable to get started than Chapter 7. It is an easier, more immediate relief.
In the past, Chapter 13’s seem to thrive in transition periods. This could be due to the flexible and versatile nature of Chapter 13 cases. Chapter 13 can always be filed with great benefit almost regardless of any circumstances. Perhaps after the full COVID economic transition occurs, a rise in Chapter 7 cases will follow to return numbers to more normal amounts.
Get more information on Filing Chapter 13 Bankruptcy here.