• A debtor may want to face his creditors in a bankruptcy case rather than ignore their calls.business is business - cliche image by Jeffrey Zalesny from Fotolia.com
  
  When an Indiana debtor finds himself dodging calls from bill collectors, he may need to change his strategy. Instead of overlooking his debt because he has no way to pay it off, he should consider filing for bankruptcy. In a Chapter 7 bankruptcy case, the bankruptcy court may discharge debts in as little as three months. Indiana debtors might agree that having debts legally discharged is a much better debt solution than pretending the debts don’t exist.
  
  

Means Test

• To file for Chapter 7 bankruptcy, a debtor must pass the means test. The means test determines if the debtor has the means to repay his debts or if the debtor should have a discharge of his debts. The debtor begins by comparing his family income with the median family income for the state of Indiana. If the debtor’s family income is less than the state median, he can file for Chapter 7 bankruptcy.
  
  As of 2010, the Census Bureau listed Indiana’s median incomes as $40,683 for a single earner; $52,367 for a family of two; $59,438 for a family of three; and $70,621 for a family of four. Add $7,500 for each family member in excess of four.
  
  If the debtor’s family income is more than the state median, he should calculate his disposable income. The debtor calculates his monthly disposable income by deducting allowed monthly expenses from monthly income. If the debtor’s monthly disposable income is less than $100, the debtor can file for Chapter 7 bankruptcy. If the debtor’s monthly disposable income is above $100, but the disposable income would not pay at least 25 percent of the debtor’s unsecured debts over the next 60 months, the debtor can file for Chapter 7 bankruptcy.
  
  If the debtor does not qualify for Chapter 7, he may need to file for Chapter 13 bankruptcy. Under Chapter 13, the debtor would repay his debts in a repayment plan spanning from three to five years (See Reference 1 & 2).
  
  

Filing

• If the debtor passes the means test, he should file a Chapter 7 bankruptcy petition. After her petition has been filed, an automatic stay will go into place and her creditors must stop calling. A trustee will be appointed to the case. The trustee will be in charge of distributing payment to the creditors. The debtor will file a schedule with the bankruptcy court, listing her exempt (property that can't be sold to repay creditors) and non-exempt property. The trustee will sell the debtor’s non-exempt property and use the proceeds to repay the debtor’s creditors. After the creditors have been paid, the debtor will receive a discharge of her unsecured debt (See Reference 3).
  
  

Exemptions

• Indiana law provides that certain property cannot be sold to repay creditors. This property includes: real or personal property used as a residence up to $15,000; spendthrift trusts; health aids; medical savings accounts; up to $300 of intangible personal property; up to $8,000 of real estate or tangible personal property; wages; pensions; public benefits; tools of the trade; and insurance. Consult Indiana state laws for a complete list of exempt property (See Reference 4).