Because bankruptcy often involves complicated and variable financial circumstances, one of the objectives of our bankruptcy laws is to ensure an orderly process for both debtors and creditors. This legal tool enables the individual filing for bankruptcy to follow a logical and rational roadmap. At the Evansville law firm of Dunlap & Nesmith, LLC, we can guide you through the process of Chapter 7 bankruptcy and help you every step of the way.

With expert legal counsel, there should be no surprises as the bankruptcy is finalized. Properly managed, the degree of loss and future financial burdens on the debtor can be minimized.

For example, most states allows the retention of certain assets, such as a portion of the value of homes and cars, while certain debts such as child support agreements are not discharged. Management of your bankruptcy in Kentucky can differ from Indiana. However, throughout the United States, Chapter 7 bankruptcy rules establish a process that essentially follows these steps:


    1. A trustee liquidates debtor assets

    1. Those assets are reduced to cash

    1. Cash is distributed among creditors

As mentioned, different assets are exempt depending on whether the filing is subject to Kentucky or Indiana laws for Chapter 7 bankruptcy. In Evansville and elsewhere in Indiana, the following are exempt (i.e., these assets are protected and retained by the individual filing for bankruptcy):

    • In Indiana, real estate up to $22,750 per person and personal property up to $12,100 per person.  (Kentucky:  $27,900 real property and $36,625 personal property)

    • Insurance, including fraternal society benefits, group life policies, certain life insurance policy proceeds, mutual life, or accident proceeds

    • Business partnership property

    • Public service employee pensions (Kentucky rules allow for all pensions)

    • Health aids

    • Tools of trade relating to National Guard service (Kentucky provides more broadly for professional office equipment, mechanical equipment, farming and non-farming tools)

    • Unemployment compensation

    • At least 75 percent of wages

Financial obligations that are not disposed in a bankruptcy typically include income taxes for the previous three years, property taxes, student loans, court-imposed fines and restitutions, and spousal support.

Additionally, the filer may face challenges on his or her ability to cover debts from disposable income. Your attorney should consider your income and then decide whether a Chapter 13 reorganization filing would be more appropriate and successful in the long term.n.