Indiana is one of the only states with no dedicated exemption for your car. Most states let you protect a set amount of vehicle equity outright; Indiana doesn’t. Your car competes with your household goods, your tools, and any other non-residential property for a single $12,100 pool. For a filer with a paid-off vehicle, that changes the whole calculation of what’s safe.
How Chapter 7 Works in Indiana
The process follows federal bankruptcy law: you file a petition, a trustee reviews your assets against Indiana’s exemption list, and anything not covered is technically available to pay creditors. Most Indiana Chapter 7 cases are “no-asset” cases — the exemptions cover everything the filer owns, and the case closes with a discharge roughly three to four months after filing. The work that decides the outcome happens before filing, in how the exemptions are applied to what you own.
How Much Home Equity Can You Protect in Indiana?
Indiana’s homestead exemption protects $22,750 in equity in real estate or tangible personal property used as your personal or family residence, or $45,500 for a married couple filing jointly who both own the home. Indiana adjusts its exemption amounts for inflation every two years, so the figure rises periodically rather than staying frozen for decades the way some states’ do. Against an average Indiana mortgage balance of about $163,287 — one of the lowest in the country — this exemption covers a meaningful share of the equity many Indiana homeowners actually hold.
Does Indiana Let You Choose Federal Exemptions Instead?
No. Indiana is an opt-out state, so filers must use Indiana's own exemption list - the federal exemptions aren't available. Indiana's exemption dollar amounts are adjusted for inflation every two years by the Department of Financial Institutions; the current figures took effect in the most recent adjustment cycle and hold until the next adjustment, due no later than March 1, 2028. You must have been domiciled in Indiana for 730 days before filing to use Indiana's exemptions. If your move to Indiana is recent, the state whose exemptions you’ll actually use may not be Indiana at all — the 730-day rule looks back to where you were domiciled before, which can matter a great deal if that state’s list is more or less generous than Indiana’s.
What Happens to Your Car in an Indiana Chapter 7?
This is where Indiana is unusual. Indiana has no separate motor vehicle exemption. Vehicle equity is protected out of the $12,100 'other tangible personal property' allowance ($24,200 for joint filers), which also has to cover household goods, tools, and any non-residential property. There is no separate line item that shields a vehicle the way most states provide. In practice, a filer with a paid-off car worth $8,000 spends $8,000 of the $12,100 tangible-property allowance on that car alone, leaving only about $4,100 for everything else that category has to cover. A financed car with little equity is rarely a problem; a valuable paid-off vehicle is the classic Indiana squeeze, and it’s worth mapping out before you file rather than after.
What Is Indiana’s Wildcard Exemption?
Indiana’s structure is best understood as two separate buckets. $12,100 in any non-residential real estate or tangible personal property ($24,200 joint) - this is the catch-all that must stretch to cover your car, and a separate $450 ($900 joint) for intangible property such as a bank balance, tax refund, or inheritance.
The $450 intangible cap is the detail that catches people. A tax refund, a bank balance, an inheritance you’re owed — these are intangible property, and Indiana protects only $450 of them ($900 for a couple). Filers who have just received a refund, or who file with several thousand dollars sitting in checking, need to plan around that limit deliberately. Timing the filing after the refund is spent on necessities is a common and legitimate response.
Do You Qualify for Chapter 7 in Indiana? The Means Test
If your household income is at or below Indiana’s median for your household size, you qualify for Chapter 7 without further analysis.
Indiana’s current median income figures:
- 1 person: $64,461
- 2 people: $81,986
- 3 people: $95,627
- 4 people: $115,656
- Each additional person: add $11,100
Earning above these figures doesn’t disqualify you automatically. The second half of the means test subtracts allowed living expenses, and many above-median Indiana households still qualify once housing, transportation, and other permitted costs are deducted.
Which Federal District Do You File In?
Indiana has two federal districts. The Northern District of Indiana sits in Hammond, South Bend, Fort Wayne, and Lafayette; the Southern District of Indiana sits in Indianapolis, Terre Haute, Evansville, and New Albany. Meetings of creditors in both districts are now held virtually by Zoom (the Northern District moved to virtual 341 meetings for cases filed on or after September 1, 2023).How Much Does a Bankruptcy Attorney Cost in Indiana?
Chapter 7 attorney fees in Indiana typically run $1,500 to $3,000, on top of the $338 federal filing fee. Unlike Chapter 13, Chapter 7 fees generally have to be paid in full before filing, because the attorney’s own fee claim would otherwise be discharged along with everything else.
Common Mistakes Indiana Filers Make
Assuming there’s a car exemption. There isn’t. Vehicle equity comes out of the shared $12,100 tangible-property allowance, and a valuable paid-off car can consume most of it.
Filing with a tax refund in the bank. Indiana protects only $450 of intangible property. A recent refund sitting in checking is exposed unless it’s been spent down on necessities first.
Assuming Indiana’s exemptions apply because you live here. The 730-day domicile rule can send a recent transplant back to a prior state’s exemption list.
Overlooking tenancy by the entireties. Property a married couple owns jointly can carry extra protection from the creditors of just one spouse — a nuance worth raising with an attorney if only one spouse is filing.
Overlooking a non-filing spouse’s income in the means test.
A Realistic Example
Consider a filer we’ll call Marcus, living in Fort Wayne. He rents, owns a 2017 pickup worth about $11,000 free and clear, has $600 in checking, and carries $24,000 in credit card and medical debt.
His truck is the problem, not the debt. At $11,000 it nearly exhausts Indiana’s $12,100 tangible-property allowance on its own, leaving about $1,100 for his household goods — which, fortunately, are modest and covered. His $600 in checking fits within the $450 intangible cap only after he uses part of it on that month’s necessities before filing, which his attorney has him do. With that handled, everything he owns is protected.
His income is below Indiana’s median for a household of one, so he qualifies for Chapter 7 automatically. He files in the Northern District, attends his 341 meeting by Zoom, and receives his discharge about ninety days later.
Frequently Asked Questions About Chapter 7 Bankruptcy in Indiana
Does Indiana have a motor vehicle exemption?
No. Indiana is unusual in having no dedicated vehicle exemption. You protect a car’s equity out of the $12,100 “other tangible personal property” allowance ($24,200 for joint filers), which also has to cover household goods, tools, and other non-residential property. A financed car with little equity is usually fine; a valuable paid-off vehicle can consume most of that allowance.
Can I keep my house if I file Chapter 7 in Indiana?
Usually, if your equity is under $22,750 ($45,500 for a married couple who both own the home). Indiana adjusts this homestead figure for inflation every two years. Because average Indiana mortgage balances are among the lowest in the country, this exemption covers the equity many Indiana homeowners actually hold.
Does Indiana allow federal bankruptcy exemptions?
No. Indiana is an opt-out state, so filers must use Indiana’s own exemption list. If you have not been domiciled in Indiana for 730 days before filing, federal law may direct you to a prior state’s exemptions, but you still cannot choose the federal system.
How much money can I have in the bank when I file Chapter 7 in Indiana?
Indiana protects only $450 of intangible property ($900 for joint filers), which includes cash, bank balances, tax refunds, and inheritances. Filers with more than that in the bank — often because of a recent tax refund — typically plan the filing date so those funds are first spent down on necessities.
What is the Indiana bankruptcy means test income limit?
It depends on household size and updates periodically. Current thresholds are roughly $64,461 for one person, $81,986 for two, $95,627 for three, and $115,656 for four, with $11,100 added per additional person. Earning above these figures does not automatically disqualify you, because allowed living expenses are deducted in the second stage of the test.
Which bankruptcy court handles my case in Indiana?
Indiana has two districts. The Northern District sits in Hammond, South Bend, Fort Wayne, and Lafayette; the Southern District sits in Indianapolis, Terre Haute, Evansville, and New Albany. Meetings of creditors in both are now held virtually by Zoom.
Where to Verify the Details
Indiana’s exemptions are codified at Ind. Code § 34-55-10-2, with the biennial dollar adjustments published by the Indiana Department of Financial Institutions. For current means test figures, check the U.S. Trustee Program website. Filing information and local rules are available through the Southern District of Indiana and the Northern District of Indiana bankruptcy courts.
Alternatives to Chapter 7 in Indiana
If your income is too high to pass the means test, or if a valuable paid-off vehicle or home equity above the exemption would be exposed, Chapter 13 bankruptcy in Indiana restructures debt into a three-to-five-year repayment plan that lets you keep property Chapter 7 might put at risk.
Last reviewed by American Debt Guide Editorial Team. Figures on this page reflect Indiana bankruptcy exemption amounts and federal filing data as of August 2026.