Bankruptcy in Indiana (2026): Exemptions & Means Test

Bankruptcy is a federal process, but the property you can keep and the income test that applies to you in Indiana are shaped by Indiana law. Indiana has opted out of the federal bankruptcy exemptions, so residents use the state exemption list in Indiana Code 34-55-10-2. The statute sets base dollar figures, but the amounts actually in force come from a Department of Financial Institutions rule that is readopted every six years for inflation.

This guide is part of our Bankruptcy by State series. It is general legal information, not legal advice, and the dollar figures below change periodically, so confirm current amounts before relying on them.

Does Indiana use state or federal bankruptcy exemptions?

Federal law lets each state decide whether its residents may choose the federal exemption list in 11 U.S.C. 522(d) or must use the state's own exemptions. Indiana is an opt-out state. Under IC 34-55-10-1, an individual debtor domiciled in Indiana may not use the federal 522(d) exemptions and must rely on the Indiana exemptions in IC 34-55-10-2. If you recently moved to Indiana, the federal domicile rules in 11 U.S.C. 522(b)(3) can require you to use another state's exemptions for a period, so the applicable list depends on your residency history.

Indiana homestead exemption

The homestead exemption protects equity in real estate or personal property that is your or a dependent's personal or family residence. IC 34-55-10-2(c)(1) states the homestead exemption as $15,000, but subsection (b) makes that base figure apply only until the Department of Financial Institutions adopts a rule under IC 34-55-10-2.5. Under the current rule, 750 IAC 1-1-1, the homestead exemption is $22,750. The statute makes the exemption "individually available to joint debtors concerning property held by them as tenants by the entireties," so spouses who file together can each claim it when they hold the residence that way. Under IC 32-17-3-1 a real estate purchase contract by a married couple creates an estate by the entireties unless the contract expressly says otherwise, so that is the ordinary case, but spouses who hold as joint tenants or tenants in common do not get the doubled exemption.

Indiana's exemption dollar amounts are not fixed forever. Under IC 34-55-10-2.5, the Indiana Department of Financial Institutions adjusts them for inflation every six years. The current amounts took effect March 1, 2022, and the next adjustment is due no later than March 1, 2028. Because the figure is scheduled to change, confirm the current amount for your filing date.

Other-property, intangible, and personal-property exemptions

Indiana structures most of its exemptions as broad property categories rather than item-by-item limits. The categories come from IC 34-55-10-2(c), and the dollar amounts in force come from the Department of Financial Institutions rule at 750 IAC 1-1-1, which supersedes the base figures of $15,000, $8,000, and $300 written into the statute:

• Other real estate or tangible personal property: up to $12,100. Because Indiana has no standalone vehicle exemption, filers typically apply part of this category to a car, household goods, and similar tangible items.
• Intangible personal property: up to $450, other than money owed to the debtor for personal services. This covers cash, bank deposits, and similar intangible assets.
• Health aids: professionally prescribed health aids for the debtor or a dependent are fully exempt.
• Other protections: certain retirement plans, education savings, public assistance and unemployment benefits, and many life-insurance and disability proceeds are protected under IC 34-55-10-2 and related statutes.
• Wages: Indiana garnishment limits and federal law protect a portion of earnings from creditors.

These categories are set by statute and their dollar amounts are readjusted by rule every six years, so verify current figures before relying on them.

The Chapter 7 means test in Indiana

The means test determines whether your income is low enough to file Chapter 7 without a presumption of abuse. The first step compares your household's current monthly income, annualized, to the median family income for an Indiana household of your size as published by the U.S. Trustee Program (justice.gov/ust). At or below the median, you generally pass the first step; above it, a more detailed calculation of allowed expenses and disposable income applies.

For cases filed on or after July 15, 2026, the U.S. Trustee Program lists Indiana median family income as:

• 1 earner: $64,461
• 2 people: $81,986
• 3 people: $95,627
• 4 people: $115,656
• Add $11,100 for each individual in excess of four.

The U.S. Trustee Program updates these figures periodically, typically about twice a year, so check the current table for your filing date.

Chapter 7 vs. Chapter 13

Chapter 7 is a liquidation: a trustee may sell non-exempt property to pay creditors, and most remaining unsecured debts are discharged, often within a few months. Because Indiana's exemptions protect a defined amount of property, many filers keep everything they own. Chapter 7 suits people with limited income and mostly unsecured debt such as credit cards and medical bills.

Chapter 13 is a reorganization for people with regular income who want to catch up on a mortgage or car loan, or whose means-test calculation raises a presumption of abuse in Chapter 7. You repay some or all of what you owe through a court-approved plan lasting three to five years, then receive a discharge of remaining eligible balances.

In both chapters, filing triggers the automatic stay under 11 U.S.C. 362, which immediately halts most collection efforts, including foreclosure sales, repossessions, lawsuits, and wage garnishment, while the case proceeds.

Where you file in Indiana

Indiana is served by two federal bankruptcy districts. You file in the district that covers the county where you have lived for the greater part of the last 180 days:

• U.S. Bankruptcy Court for the Northern District of Indiana (Hammond, South Bend, Fort Wayne, Lafayette), covering the northern counties.
• U.S. Bankruptcy Court for the Southern District of Indiana (Indianapolis, Evansville, New Albany, Terre Haute), covering the southern counties.

What bankruptcy can and cannot do

Most unsecured debts, such as credit cards, medical bills, and personal loans, are dischargeable. Some obligations generally are not, including most student loans, recent income taxes, child support and alimony, and debts from fraud. Before filing, the law requires credit counseling from an approved agency, and a debtor-education course is required before discharge. Bankruptcy has long-term effects on credit and is not right for everyone, so get a free bankruptcy evaluation from an Indiana lawyer weighing Chapter 7 against Chapter 13 for you (attorney advertising).

Frequently Asked Questions

Does Indiana use state or federal bankruptcy exemptions?

Indiana has opted out of the federal exemptions under IC 34-55-10-1. Residents must use Indiana's state exemptions in IC 34-55-10-2 and cannot choose the federal list in 11 U.S.C. 522(d), subject to the federal domicile rules for people who recently moved to the state.

What is the homestead exemption in Indiana?

IC 34-55-10-2(c)(1) is the homestead category, and the amount in force is $22,750 of equity in a residence under the Department of Financial Institutions rule at 750 IAC 1-1-1; the base figure written into the statute is $15,000. Jointly filing spouses can each claim the exemption for a home they hold as tenants by the entireties, which is how Indiana treats a spousal purchase unless the contract says otherwise. The $22,750 amount took effect March 1, 2022 and is adjusted for inflation every six years, with the next adjustment due by March 1, 2028. Confirm the current figure for your filing date.

What is the Indiana median income for the means test?

For cases filed on or after July 15, 2026, the U.S. Trustee Program lists Indiana median family income as $64,461 for 1 person, $81,986 for 2, $95,627 for 3, and $115,656 for 4, adding $11,100 per additional person. These figures update periodically.

Will I lose my house or car in an Indiana bankruptcy?

Often no. The homestead exemption protects up to $22,750 of home equity. Indiana has no separate vehicle exemption, so a car is protected under the $12,100 other-tangible-property category. If your equity is within these limits and you stay current on secured payments, you can typically keep the property. Equity above the exemptions may be at risk in Chapter 7 but can often be addressed in Chapter 13.

Does Indiana have a vehicle exemption?

Not a standalone one. A motor vehicle is protected using the IC 34-55-10-2(c)(2) category for other real estate or tangible personal property, currently $12,100 under the Department of Financial Institutions rule, which also covers household goods and similar items.

Which bankruptcy court handles my Indiana case?

You file in the Northern or Southern District of Indiana, depending on the county where you have lived for most of the past 180 days. Indianapolis cases go to the Southern District.

What is the automatic stay?

The automatic stay under 11 U.S.C. 362 takes effect when you file and immediately stops most collection actions, including foreclosure, repossession, lawsuits, and wage garnishment, while your case is pending.

Can bankruptcy erase all of my debts?

No. Most unsecured debts are dischargeable, but obligations such as most student loans, recent taxes, child support, alimony, and debts from fraud generally are not.