Indiana put new bankruptcy exemptions into effect on March 1, 2022. These new, updated bankruptcy exemptions added approximately a 15% increase to Indiana’s core bankruptcy exemptions. This includes Indiana’s residence exemption, the other real estate, and tangibles, and the cash or “intangibles” exemption.
It is important to note that these amounts are potentially double when a married couple files together.
The amounts increase every 6 years under current Indiana law. They are adjusted according to inflation levels. The current inflation level in the United States has exceeded 5% on an annual basis. It was critically needed by debtors that some increase to the exemption levels would take place. These increases further protect the property that debtors owe against creditor action.
However, these exemptions amounts were increased according to general inflationary statistics. These statistics are based on the price of all goods and services. The increased residence exemption did not take into account the massive price increase from the real estate market.
This is leaving many debtors in trouble because the homes that they purchased only 4-5 years ago have nearly doubled in value in many cases. This effectively excludes many Indiana residents with houses from having free access to the Chapter 7 release of debts. Many of these debtors may also not have sufficient income to fund a Chapter 13 case to protect the house equity.
Indiana currently limits home protection to $22,750 per person. This amount is in stark contrast to the neighboring State of Ohio with a current homestead exemption of $145,425 per person. It is argued that the current statutory method of increase for the residence exemption in Indiana has been wholly inadequate to address the vast increase in real estate values. It will take new action from Indiana’s legislative assembly for these numbers to increase to address the realities of the current real estate market.