Bankruptcy Indiana

Thirteen is an odd number.  In a way, in order to file a Chapter 13 bankruptcy, you need to be in an odd situation: you're drowning in debts but you do have a job. 

Of the two kinds of bankruptcy commonly filed by individuals, Chapter 13 is the one under which debtors make payments to some of their creditors over a period of three to five years.  (Chapter 7 is the one where some property may be sold to satisfy some of the debts, with other debts being forgiven altogether.)

One of the first steps in figuring out whether you qualify to file a Chapter 7 bankruptcy in Indiana is measuring your income against the median income for a family or your size here in the state. What is measured is your average income over the last six months before the bankruptcy is filed.  That number is termed "current monthly income".

In general, if that income is less than equal to the median income, you qualify to file a Chapter 7.  If, however, that income exceeds the median amount, you must pass a "means test" to help the court decide if you have enough disposable income (after subtracting allowable expenses and required debt payment, to repay at least some of your unsecured debts.

As one of only fifteen Certified Consumer Bankruptcy Specialists in the state of Indiana, I was called upon to help write the portion of the bankruptcy laws in our state that has to do with exemptions. The reason I'm bringing this up now is to emphasize a very important point: the bankruptcy means test is not a do-it-yourself project! Congress has set out special technical definitions of "disposable income", "current monthly income", "expenses", and other terms, so there are many details to consider in filling out the forms.  In fact, correctly filling out these income forms is a critically important part of the work I do as a bankruptcy attorney in Indiana.

Our laws have changed several times over the almost twenty-five years I've been in practice.  Some very big changes were made in 2005, and more changes are being debated in Congress right now.  The basic idea behind bankruptcy law hasn't changed one bit.  As Consumer Action  puts it in their publication Your Right To a Financial Fresh Start,  the purpose of bankruptcy is "to give debt burdened consumers an organized, systematic way of paying back creditors".