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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