BANKRUPTCY FACTS
Bankruptcy is a process
in which a person or business who has become unable to pay his debts
or obligations (the "debtor") may eliminate those debts,
or "discharge" them. The result is that the individual
or business is relieved from having to pay the debts.
The purpose of bankruptcy law is to allow a person to obtain a fresh
start. The most common types of bankruptcy are Chapter 7 and Chapter
13. Chapter 7 is more commonly referred to as "liquidation."
In a Chapter 7 case, the debtor is allowed to keep all of the property
that he or she owns that is exempt. In Indiana, each person may
keep up to $8,000.00 worth of personal property and $15,000.00 equity
in residential real estate. Married debtors who file jointly may
keep up to $16,000.00 worth of personal property and $30,000.00
equity in residential real estate.
In a Chapter 13 case, the debtor proposes a plan to the court which
provides that the debtor will make monthly payments to the bankruptcy
trustee. The length of the plan is usually three to five years.
The money paid into the plan is used by the trustee to pay all or
a percentage of the individual's debts. We represent clients in
Chapter 7 cases only. We do not handle Chapter 13 cases.
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