Indiana Bankruptcy Exemptions: Home, Vehicle, and Wage Limits

If you file bankruptcy in Indiana, you can keep up to $22,750 of equity in your home, $12,100 worth of household goods and vehicles combined, $450 in cash and bank balances, and essentially all of your retirement savings. Those are the core Indiana bankruptcy exemptions, and they come from state law rather than the federal bankruptcy code. Everything above those limits is potentially available to the trustee, so knowing exactly where each ceiling sits is what determines whether an asset stays with you or goes to your creditors.

Indiana Uses Its Own Exemption List

Indiana is one of roughly 30 states that have opted out of the federal exemption system. Indiana Code 34-55-10-1 says a debtor domiciled in Indiana “is not entitled to the federal exemptions” in 11 U.S.C. § 522(d).¹ You cannot mix and match, and you cannot choose the federal list because it looks better. The Indiana amounts in Indiana Code 34-55-10-2 are what you get.

That matters because the federal scheme is more generous in the categories most filers care about. Federal law offers a $31,575 homestead, a $5,025 vehicle exemption, and a wildcard of up to $17,475.² Indiana’s homestead is $22,750, there is no separate vehicle exemption at all, and there is no true wildcard. If you have real equity in a house or a newer car, that gap shows up quickly.

You Must Have Lived in Indiana for Two Years

Filing in an Indiana court is not enough on its own. Federal law requires that you have been domiciled in Indiana for the full 730 days before your filing date.² If you moved in more recently, the exemption laws of the state where you spent the majority of the 180 days before that two-year window usually apply instead. The rule exists to keep people from relocating to a debtor-friendly state right before filing.

Home Equity: $22,750 Per Person

Indiana protects up to $22,750 of equity in your primary residence.³ Equity is the home’s current market value minus what you owe on mortgages and liens. A house worth $200,000 with a $185,000 mortgage has $15,000 in equity, well within the limit. If your equity is higher than $22,750, the trustee can potentially sell the house, pay off the mortgage, hand you the exempt amount, and give the rest to creditors.

Married Couples Filing Together

When both spouses file a joint petition, each claims a full set of exemptions. That effectively doubles the homestead to $45,500 in shared equity. The statute confirms that the homestead exemption “is individually available to joint debtors concerning property held by them as tenants by the entireties.”³

Tenancy by the Entirety

Indiana Code 34-55-10-2(c)(5) gives married couples a second, larger shield. When the home is owned as tenants by the entirety and the debt belongs to only one spouse, the filing spouse’s entire interest in the property is exempt, without a dollar cap.³ The protection disappears if both spouses are liable on the debt. For a married homeowner whose spouse is not on the hook, filing individually and relying on this exemption can protect a house with far more equity than $22,750.

Personal Property: One $12,100 Bucket

Indiana gives you a single blanket exemption of $12,100 for all tangible personal property.³ Furniture, clothing, electronics, appliances, jewelry, tools, and vehicles all share that pot. There are no separate line items the way the federal system provides.

Vehicles

Indiana has no dedicated motor vehicle exemption. Your car equity has to fit inside the same $12,100 as everything else you own. If you own a car worth $8,000 free and clear, you have $4,100 left for the rest of your belongings. This is where the Indiana list bites hardest, and it is the most common planning problem filers work through with an attorney.

Work Tools

There is no separate tools-of-the-trade exemption either. Mechanics, contractors, stylists, and anyone else with professional gear has to protect it under the same $12,100. Two things help. The court values property at its quick-sale price, not what you paid for it, and used equipment usually sells for far less than its purchase price. If you still owe money on financed tools, the loan balance reduces the equity the trustee counts.

Cash and Bank Accounts: $450

Intangible personal property has its own separate, much smaller cap: $450. That covers cash on hand, checking and savings balances, and legal claims you hold against others.³ It is one of the lowest cash exemptions in the country and it catches many filers off guard. Whatever sits in your account on filing day above $450 is potentially reachable by the trustee. Many attorneys recommend spending balances down on legitimate expenses, such as rent, groceries, or an overdue utility bill, before filing.

Retirement, Health, and Medical Accounts

Retirement savings are treated far better than any other asset in Indiana. Under Indiana Code 34-55-10-2(c)(6), any interest in a retirement plan or fund is exempt as long as contributions were pre-tax or the account is a Roth IRA.³ That covers 401(k)s, 403(b)s, traditional IRAs, Roth IRAs, pensions, and similar qualified plans, along with earnings and rollovers.

Employer-sponsored plans like 401(k)s and pensions are protected with no dollar cap under Indiana law. Traditional and Roth IRAs are subject to a federal ceiling of $1,711,975 in combined value, adjusted every three years for inflation.² Money rolled over from an employer plan into an IRA does not count against that number. For nearly every consumer filer, retirement savings come through bankruptcy untouched.

Health savings accounts and medical care savings accounts established under Indiana law are also exempt, and any medical device or aid prescribed for you or a dependent is fully protected regardless of value.³

Life Insurance and Government Benefits

A life insurance policy naming your spouse, child, or dependent relative as beneficiary is exempt from both the policyholder’s creditors and the spouse’s creditors. Death benefits, cash surrender value, loan value, and dividends are all covered.⁴ One exception: premiums paid within the year before you file are not exempt, which prevents last-minute funding of a policy to hide cash.

Unemployment compensation is exempt from levy, execution, and attachment until you actually receive it.⁵ Workers’ compensation benefits are similarly protected from creditor claims.⁶ Alimony, child support, and spousal maintenance you receive are generally protected because they are treated as necessary support for you and your dependents.

How Much of Your Wages Creditors Can Reach

If a creditor is garnishing your paycheck, Indiana Code 24-4.5-5-105 caps the take at the lesser of two figures: 25 percent of your disposable earnings for the week, or the amount by which those earnings exceed 30 times the federal minimum hourly wage.⁷ You keep at least 75 percent, and low-wage earners keep more. On a showing of good cause, a court can reduce the garnishment percentage further, though not below 10 percent.

Chapter 7 vs. Chapter 13

Exemptions do different work depending on which chapter you file.

In Chapter 7, the trustee gathers and sells anything that exceeds your exemptions and distributes the proceeds to creditors.⁸ If everything you own fits inside Indiana’s limits, the trustee has nothing to sell. Most consumer Chapter 7 cases end this way, as “no-asset” cases.

In Chapter 13, you keep your property and repay creditors over three to five years. Exemptions still matter because of the liquidation test: your plan has to pay unsecured creditors at least as much as they would have received in a Chapter 7 liquidation. Non-exempt equity of $20,000 means your plan has to distribute at least $20,000 to unsecured creditors across its life. More non-exempt property means a higher monthly payment.

How to Actually Claim These Exemptions

Nothing is automatic. You have to list each asset you want protected on Schedule C (Form 106C) when you file, identify the Indiana statute that applies, and state the value you are claiming.⁹ An asset you forget to list can be lost even when an exemption would have covered it.

The trustee and any creditor then have 30 days after the meeting of creditors to object to a claimed exemption. If nobody objects in that window, the exemption stands, even if you overclaimed. Courts treat that deadline as strict. The trustee can still challenge an exemption up to one year after the case closes if it was fraudulently claimed.⁹

Valuation is where most disputes start. You report quick-sale value, not replacement cost and not what you paid. If the trustee thinks your numbers are too low, the trustee will object and the court decides. Getting realistic valuations before you file, especially on a house, a vehicle, and any expensive tools or collectibles, is the single best way to keep what Indiana law says you can keep.

1
Indiana General Assembly. Indiana Code 34-55-10-1 – Bankruptcy Exemptions
2
Office of the Law Revision Counsel. 11 U.S. Code 522 – Exemptions
3
Indiana General Assembly. Indiana Code 34-55-10-2 – Bankruptcy Exemptions Limitations
4
Indiana General Assembly. Indiana Code 27-1-12-14
5
Indiana General Assembly. Indiana Code 22-4-33-3 – Assignment or Pledge of Rights to Benefits
6
Justia. Indiana Code Title 22 Article 3 Chapter 2 – Workers Compensation
7
Indiana General Assembly. Indiana Code 24-4.5-5-105 – Limitation on Garnishment and Proceedings Supplemental to Execution Employers Fee
8
United States Courts. Chapter 7 – Bankruptcy Basics
9
Legal Information Institute. Federal Rules of Bankruptcy Procedure Rule 4003 – Exemptions