How Does Chapter 13 Bankruptcy Work in Indiana?

Chapter 13 bankruptcy in Indiana works by reorganizing your debts into a court-supervised repayment plan that lasts three to five years, after which qualifying balances still owed are discharged. You keep your property while catching up on missed mortgage or car payments through the plan, and the moment you file, creditors have to stop collecting. Indiana’s own exemption rules, its two federal bankruptcy districts, and how your income compares to the state median all shape what your case looks like in practice.

Who Can File

You need a reliable source of regular income to fund a multi-year plan. That income can come from wages, self-employment, Social Security, pensions, or rental payments. Only individuals and married couples qualify; a business entity cannot file Chapter 13.¹

Federal law also caps how much debt you can carry into Chapter 13. Your noncontingent, liquidated unsecured debts must be below $526,700, and your noncontingent, liquidated secured debts must be below $1,580,125.² Those figures are adjusted periodically, so confirm the current numbers if you’re close to either ceiling. If you exceed the limits, Chapter 11 is the alternative, though it is significantly more complex and expensive.

How Long the Plan Lasts

Plan length turns on how your household income compares to Indiana’s median. Below the median for your household size, the plan runs three years, though a judge can extend it up to five for good cause. At or above the median, you’re locked into a full five-year plan. Nothing goes beyond five years.³

For cases filed between November 2025 and March 2026, Indiana’s median income figures are:

Single filer: $62,808
Household of two: $79,884
Household of three: $93,175
Household of four: $112,691
Add $11,100 for each additional person

The U.S. Department of Justice updates these numbers periodically.⁴ The means test subtracts allowed expenses from your gross income to figure out your disposable income, and that disposable figure funds your monthly plan payment.

Indiana Exemptions and Why They Matter

Indiana has opted out of the federal exemption list, so state exemptions apply to any Indiana bankruptcy filing.⁵ Chapter 13 doesn’t liquidate assets, but exemptions still drive the numbers. Under the “best interest of creditors” test, your unsecured creditors must receive at least what they would have received in a Chapter 7 liquidation.⁶ The less equity your exemptions protect, the more you have to pay through the plan.

The key Indiana exemptions under Indiana Code 34-55-10-2 include:⁷

Homestead: up to $22,750 of equity in your primary residence. Married couples filing jointly can each claim this amount, effectively doubling protection to $45,500 on a jointly owned home.
Tangible personal property: up to $12,100 in other real estate or tangible property such as furniture, vehicles, and household goods.
Intangible personal property: up to $450 for items like cash on hand or bank balances.

These figures are adjusted periodically, so verify current amounts before filing. Retirement accounts and pensions generally receive full protection under separate federal and state provisions, regardless of balance.

The Automatic Stay

The instant you file, a legal shield called the automatic stay takes effect. Creditors have to stop nearly all collection activity: foreclosure proceedings, wage garnishments, lawsuits, bank levies, and collection calls.⁸ For a homeowner facing foreclosure, that pause is what makes a plan possible in the first place.

The stay has limits. It won’t stop criminal proceedings, and certain domestic support obligations like child support and alimony can still be enforced. If you had a bankruptcy case dismissed within the previous year, the stay in a new filing lasts only 30 days unless the court extends it. Two dismissed cases in the prior year, and no stay takes effect at all without a court order.

What Chapter 13 Does for a House or Car

Chapter 13 has tools for secured debts that Chapter 7 doesn’t offer. Saving a home from foreclosure or lowering a car payment is often the whole point of filing.

Catching Up on a Mortgage

If you’re behind on your mortgage, the plan lets you spread the missed payments over its full length while you keep making regular monthly payments going forward.⁹ If you’re $12,000 behind on a five-year plan, roughly $200 a month goes toward the arrears on top of your ongoing mortgage payment. By the end, you’re current, and the pending foreclosure is gone.

You cannot modify the terms of the primary mortgage itself. Interest rate, monthly payment, and remaining balance stay put. The plan cures the default; it doesn’t rewrite the loan.

Cramming Down a Car Loan

If you owe more on your car than it’s worth and you bought it more than 910 days (about two and a half years) before filing, you can cram the loan down to the vehicle’s current market value.⁶ The loan splits: the secured portion equals what the car is worth, and the rest becomes unsecured debt paid at the same rate as credit cards and medical bills. Owe $18,000 on a car worth $11,000, and only $11,000 stays secured. That can drop your monthly payment sharply.

Vehicles bought inside the 910-day window are protected from cramdown, so the lender keeps the full balance as a secured claim. If you’re close to that cutoff, running the math on waiting to file may be worthwhile.

Stripping a Second Mortgage

If your home is worth less than the balance on your first mortgage, a second or third mortgage can be stripped off entirely. The junior lien is reclassified as unsecured and paid at whatever percentage the plan gives unsecured creditors. Complete the plan, and the remaining balance is discharged and the lien comes off the property. This tool exists only in Chapter 13.

Debts That Survive Discharge

Finishing the plan doesn’t wipe out everything. Several categories of debt survive a Chapter 13 discharge:¹⁰

Domestic support: child support and alimony, including anything that came due during the plan.
Student loans, unless you file a separate adversary proceeding and prove undue hardship.
Criminal restitution and fines from a criminal sentence.
Priority tax claims, which must be paid in full through the plan. Older income tax debts may be dischargeable if they meet specific timing requirements around when the return was due, filed, and assessed.
Civil judgments for willful or malicious injuries you caused.
Long-term secured debts like a mortgage cured through the plan, which continue on their original terms afterward.

Chapter 13’s discharge is broader than Chapter 7’s in one respect: certain divorce-related property settlement debts that would survive Chapter 7 can be eliminated by completing a Chapter 13 plan.

What You Have to Do Before Filing

Federal law requires a credit counseling briefing from an approved nonprofit within 180 days before your petition date.¹¹ The session covers budgeting alternatives, runs by phone or online, typically costs under $50, and takes about an hour. The U.S. Department of Justice maintains a list of approved agencies serving Indiana.¹²

You’ll also need financial records ready:

All required federal and state tax returns for the four years before filing must actually be filed with the taxing authority, not just handed to your attorney.¹³
Pay stubs or other income documentation for at least 60 days, though the trustee may ask for up to six months.
A creditor list with names, addresses, account numbers, and amounts owed.
An asset inventory covering everything you own, from real estate to bank accounts to clothing, with estimated values.
A line-item monthly budget, which is used to calculate your disposable income and plan payment.

The petition uses official federal forms with schedules for assets, liabilities, income, and expenses. Errors or omissions can delay confirmation, raise your plan payment, or get the case dismissed.

A second course, called debtor education or personal financial management, has to be completed after filing but before the court will grant a discharge.¹⁰ It runs about two hours. Skip it, and no discharge, even if you made every plan payment.

Filing in an Indiana Bankruptcy Court

Indiana has two federal bankruptcy districts. The Northern District operates courthouses in South Bend, Fort Wayne, Hammond, and Lafayette. The Southern District covers the rest of the state, including Indianapolis. You file in whichever district covers your county.

The filing fee for Chapter 13 is $313, which can be paid in installments over 120 days if you can’t pay it all upfront.¹⁴ Once the petition is filed, the automatic stay is immediate.

Between 21 and 50 days after filing, you attend a 341 Meeting of Creditors. The court-appointed Chapter 13 trustee runs this meeting, usually by phone or video. The trustee asks questions under oath about your finances, verifies your identity, and reviews the proposed plan. Creditors can attend and ask questions, though most don’t.

After the 341 meeting comes the confirmation hearing. The judge checks that the plan is proposed in good faith, devotes all projected disposable income to payments, and gives unsecured creditors at least what they’d receive in a Chapter 7 liquidation. Priority debts like back taxes and domestic support must be paid in full. Secured creditors must receive at least the value of their collateral over the life of the plan.⁶ Once confirmed, you send monthly payments to the trustee, who pays your creditors.

What It Costs

The $313 filing fee is the smallest number in the picture. Two other costs matter.

The Chapter 13 trustee takes a percentage of every plan payment as a commission, capped by federal law at 10%.¹⁵ The actual percentage varies by district. It’s built into your plan payment, so you don’t cut a separate check, but for every $500 you send the trustee, up to $50 may go to administrative costs rather than creditors.

Attorney fees for Chapter 13 in Indiana generally run from roughly $3,000 to $5,000, depending on case complexity. Most districts use a “no-look” or presumptive fee, a standard amount the court approves without requiring the attorney to itemize time. Attorney fees can be paid through the plan itself, so you don’t need the full amount at the start. Most attorneys ask for a modest retainer before filing and fold the rest into the monthly plan payment.

If the Plan Runs Into Trouble

Three to five years is a long time, and job loss, medical emergencies, and other setbacks can make plan payments impossible. Several options exist before the case falls apart.

Usually the first move is asking the court to modify the plan. Lower payments or a longer timeline (up to the five-year cap) can absorb a drop in income. If the problem is temporary, the trustee may agree to let you catch up over a few months.

When modification isn’t enough, you can request a hardship discharge. It’s rare and demands proof that the failure to finish was caused by circumstances beyond your control, that unsecured creditors already received at least their Chapter 7 equivalent, and that further modification isn’t practical.¹⁰

Beyond those, two paths remain: dismissal or conversion.¹⁶

Dismissal. You can dismiss your own Chapter 13 case at any time, as long as it wasn’t converted from another chapter. The automatic stay ends and creditors can resume collection. You can refile later, but certain dismissal reasons (like failing to appear or a creditor’s relief motion) trigger a 180-day wait. Even when you can refile right away, the automatic stay in the new case may be limited to 30 days if you had a case pending in the prior year.
Conversion to Chapter 7. You can convert at any time. The case shifts from repayment to liquidation, with a trustee selling nonexempt assets to pay creditors. It makes sense when you have little nonexempt property and need a faster resolution, but it’s not available if you already received a Chapter 7 discharge in the past eight years.

The court or a creditor can also force dismissal or conversion for cause, including missed payments, unfiled tax returns, or falling behind on post-filing domestic support. That’s where most failed Chapter 13 cases end up: dismissed without discharge, with the debtor back where they started, minus whatever went into the plan.

1
Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor
2
United States Courts. Chapter 13 – Bankruptcy Basics
3
Office of the Law Revision Counsel. 11 USC 1322 – Contents of Plan
4
United States Department of Justice. November 1, 2025 Median Income Table
5
Indiana General Assembly. Indiana Code 34-55-10-1 – Bankruptcy Exemptions
6
Office of the Law Revision Counsel. 11 USC 1325 – Confirmation of Plan
7
Indiana General Assembly. Indiana Code 34-55-10-2 – Bankruptcy Exemptions; Limitations
8
Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay
9
Office of the Law Revision Counsel. 11 USC 1322 – Contents of Plan
10
Office of the Law Revision Counsel. 11 USC 1328 – Discharge
11
Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor
12
United States Department of Justice. List of Credit Counseling Agencies Approved Pursuant to 11 USC 111
13
Internal Revenue Service. Declaring Bankruptcy
14
United States Courts. Bankruptcy Court Miscellaneous Fee Schedule
15
Office of the Law Revision Counsel. 28 USC 586 – Duties; Supervision by Attorney General
16
Office of the Law Revision Counsel. 11 USC 1307 – Conversion or Dismissal