Many people considering whether to file for bankruptcy wonder whether they will be able to keep their house and car under bankruptcy protection.  The simple answer is that most people do not lose their house and car when they file, as long as they continue making mortgage and car loan payments.

What can you keep?

When someone files for bankruptcy in Indiana, he or she must reveal the value of all personal property on their Statement of Financial Affairs.  In Indiana, each person filing for bankruptcy is allowed to maintain $9,350 of unencumbered property and up to $17,600 of equity in a home.  Your remaining unencumbered property is sold, with the sale proceeds allocated to pay creditors.

When a married couple files for bankruptcy, those numbers are doubled—they are allowed to keep $18,700 of unencumbered property and $35,200 in home equity.  Our experienced bankruptcy attorneys can help you calculate the net equity in your home and determine which kind of bankruptcy would help you the most.

What are your options?

Under federal law, an individual can file for bankruptcy one of two ways:

Chapter 7 bankruptcy—also known as a straight bankruptcy, this filing can wipe out all debts except these:

  • Child support
  • Alimony
  • Local, state, and federal taxes
  • Fines owed to federal or state governments
  • Student loans
  • Bills for luxury items purchased within 90 days of filing
  • Cash advances borrowed within 90 days of filing
  • Debts resulting from fraud

Chapter 13 bankruptcy—Also known as a ‘wage earner bankruptcy’, this filing helps you set up a repayment plan to pay your debts over several years without harassment from creditors.  This may be your best choice if you hold a significant amount of property that you want to keep.

Consulting with the experienced Evansville bankruptcy lawyers at Dunlap & Nesmith LLC helps ensure that you make the right choice and that you understand the financial and credit implications of each type of bankruptcy filing.


Before you are allowed to file for bankruptcy, you must complete a credit counseling course from an approved agency within six months of filing.  The goal is to ensure that consumers learn how to manage their finances better.