If you file bankruptcy in Indiana, you cannot choose the federal exemption list. Indiana has “opted out” of the federal bankruptcy exemptions under Indiana Code § 34-55-10-1, so Indiana residents must use the state exemption scheme in Indiana Code § 34-55-10-2 (plus a handful of separate federal non-bankruptcy protections, such as Social Security and ERISA-qualified pensions). That single rule shapes everything else: Indiana does not offer the familiar federal categories, and it does not even have a dedicated motor-vehicle exemption. Instead, Indiana protects your home under one dollar cap and lumps your car, furniture, tools, and other belongings into a separate “tangible personal property” cap that functions much like a wildcard.
Indiana opted out of the federal exemptions
Federal bankruptcy law (11 U.S.C. § 522) lets each state decide whether its residents may pick the federal exemption list or must use the state list. Indiana is an opt-out state. That means when you file Chapter 7 or Chapter 13 here, you protect property using Indiana’s figures, not the federal ones. You can still stack certain federal non-bankruptcy exemptions on top of the Indiana list—these include Social Security benefits, veterans’ benefits, federal civil-service and military retirement, and ERISA-qualified retirement plans—but you cannot mix and match the § 522(d) federal bankruptcy menu with the Indiana menu.
Because you are locked into the state set, the Indiana dollar caps matter a great deal. They are listed in Indiana Code § 34-55-10-2, and the legislature directs that the main amounts be adjusted for inflation every two years (on March 1 of each even-numbered year). That biennial adjustment is the reason you should always confirm the current figure before relying on it.
The Indiana homestead exemption
Indiana’s homestead exemption protects equity in real estate or personal property you use as your residence. This is the “residential” category in Indiana Code § 34-55-10-2(c)(1). As of recent adjustment cycles the homestead figure has been in the low-$20,000s for an individual filer, but because Indiana re-indexes the amount every two years, you should confirm the exact current number against the statute or with the U.S. Bankruptcy Court for the Northern or Southern District of Indiana before you count on it. Do not assume an out-of-state friend’s number applies—Indiana’s homestead cap is far lower than the unlimited or six-figure homesteads some states allow.
A key Indiana feature: spouses who jointly own and file can each claim the homestead exemption, effectively doubling the protected equity on a jointly owned home. Also, because the exemption is tied to equity (value minus what you owe), a home with a large mortgage often has little non-exempt equity even if its market value is high.
Your car, furniture, and the personal-property cap
This is where Indiana surprises people: there is no standalone vehicle exemption. Many states give you a fixed dollar amount specifically for a car. Indiana does not. Your vehicle is protected only through the general “tangible personal property” exemption in Indiana Code § 34-55-10-2(c)(2), the same bucket that covers household goods, furniture, clothing, and tools. Because that bucket is a flexible dollar cap rather than a list of specific items, Indiana filers often use it as a de facto wildcard—applying it to whatever assets they most want to keep, including a car’s equity.
Like the homestead figure, the tangible personal-property cap is indexed and adjusted every two years, so confirm the current amount before you rely on it. A separate, much smaller cap applies to intangible personal property (other than money owed to you by your employer, such as wages), under § 34-55-10-2(c)(3). Health aids are fully exempt without a dollar limit.
Practical point: only the equity you hold matters. If you owe more on your car loan than the car is worth, the car has no equity to exempt, and you can usually keep it in Chapter 7 by staying current on the loan (or reaffirming it).
Retirement, insurance, and wages
Tax-qualified retirement accounts—401(k)s, 403(b)s, pensions, and IRAs—are broadly protected, both under Indiana law and federal non-bankruptcy provisions, which is why filers often keep substantial retirement savings. Certain life-insurance proceeds and policy values payable to a spouse, child, or dependent are also exempt under Indiana law. Public benefits such as unemployment compensation, workers’ compensation, and public assistance are protected as well.
For wages, Indiana follows the federal floor set by the Consumer Credit Protection Act: a creditor with a judgment generally cannot garnish more than 25% of your disposable earnings, or the amount by which your weekly disposable earnings exceed 30 times the federal minimum wage, whichever is less (Indiana Code § 24-4.5-5-105). This 25% cap mirrors the federal limit rather than offering a more generous Indiana-specific protection, though some debts (child support, taxes, student loans) follow different rules.
Exceptions and traps
- Residency timing. Federal bankruptcy law looks at where you lived during the roughly two years before filing. If you moved to Indiana recently, you may be required to use a prior state’s exemptions instead. Check the 730-day rule before assuming Indiana’s list applies.
- No federal-list option. Some debtors expect to use the federal exemptions’ large wildcard. In Indiana you cannot. Plan around the Indiana caps from the start.
- Liens survive. Exemptions protect equity from unsecured creditors and the trustee; they do not erase mortgages, car loans, or other consensual liens. You still must pay (or surrender) secured collateral.
- Joint filers. Married couples can often double the main exemptions on jointly owned property, but only for property both actually own.
- Biennial adjustments. The dollar amounts change. A figure that was correct two years ago may be outdated. Always verify against the current statute.
How to claim and enforce your exemptions
Exemptions are not automatic in the sense of requiring no action—you must list them. When you file, you (or your attorney) complete Schedule C, identifying each asset and the specific Indiana statute you are using to protect it. The bankruptcy trustee and creditors then have a limited window (generally 30 days after the meeting of creditors concludes) to object. If no valid objection is filed, the exemption stands. Claiming the wrong statute or undervaluing the wrong asset can cost you property, so accuracy on Schedule C is essential.
The authoritative source for the rules is Indiana Code § 34-55-10-1 and § 34-55-10-2, published by the Indiana General Assembly. For the current adjusted dollar amounts, the U.S. Bankruptcy Court for the Northern and Southern Districts of Indiana, or a licensed Indiana bankruptcy attorney, can confirm the figure in effect for your filing date. For consumer-debt questions short of bankruptcy—such as debt collectors, garnishment abuses, or credit reporting—contact the Office of the Indiana Attorney General, Consumer Protection Division, which handles consumer complaints under Indiana law. At the federal level, remember that the Fair Debt Collection Practices Act (FDCPA) and Fair Credit Reporting Act (FCRA) protect you regardless of which state you live in. Because exemption rules are technical and the amounts change on a fixed schedule, treat any number you read—including in this article—as a starting point to verify, not a final answer.
Official Indiana Sources
This page is based on Indiana law. Limits and deadlines change — verify the current details directly with the official Indiana sources below. This is general legal information, not legal advice.
Federal law also applies. Federal laws like the Fair Debt Collection Practices Act and Fair Credit Reporting Act protect you nationwide, on top of Indiana’s own rules.
This article is general legal information, not legal advice, and may not reflect the most current law or the law in your jurisdiction. Laws vary by state and change over time. For advice about your specific situation, consult a licensed attorney.
