Homestead Exemption Extends Through Cell Bars, Attorney for Bankruptcy in Indiana Explains

May 18, 2012 1:32 am Published by

Even deep in debt, in need of payday loan debt help and student loan debt help, worried about unpaid tax bills and wage garnishment, people worry most, I’ve found, about losing their home. Does filing personal bankruptcy in Indiana mean losing your home?  What about a home when filing small business bankruptcy in Indiana?

Enter the Indiana homestead exemption. To understand how the exemption works, as I always stress to readers of these Bankruptcy in Indiana articles, you must understand that the bankruptcy court system itself was put into place not as a punishment for debtors, but to help them. One of the highlights of my 25-year long career as a lawyer for bankruptcy in Indiana was helping write the exemptions portion of our laws, including the Indiana homestead exemption.

The exemption is a dollar amount that can be protected in bankruptcy Chapter 7 in Indiana.  If a debtor’s equity in his or her home is less than the amount of the homestead exemption, the bankruptcy trustee will not be able to force a sale of the home in order to pay creditors. The homestead exemption in Indiana is currently $17,800 per person.  And, as one of the Columbus bankruptcy lawyers who is my colleague reminds her clients, if a couple jointly owns their home, make that double, or $35,600 in homestead exempted assets.

Last year, a very interesting bankruptcy case in the state of Iowa proved the power of the homestead exemption, and I you’ll see how this story illustrates the way the bankruptcy laws demonstrate an understanding of the importance people place on keeping their home.

  • In 2010, the debtor, G., was sentenced to 14 years in federal prison.
  • In 2011, G. filed Chapter 7 bankruptcy, claiming his home in Cedar Falls (which was occupied by a tenant) as his exempt homestead.
  • A creditor objected, on the grounds that G. would not be living in that house for the foreseeable future, asking that the home be sold and the money used to pay back the debts G. owed.
  • The court ruled that the debtor was entitled to keep his real estate and claim the exemption even though he was incarcerated.

As a long-time debt consolidation lawyer offering bankruptcy services in Indianapolis, I can assure losing your home – or losing anything – could turn out to be nothing but a myth that’s standing between you and the fresh financial start you deserve! 



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This post was written by Mark Zuckerberg

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