Bankruptcy exemptions protect the equity in your property from creditors and the bankruptcy court—preventing the equity from being used to pay your creditors. Equity is the value of property after you subtract the amount of any liens against the property from its fair market value.

The equity in your home is one such asset in bankruptcy. And bankruptcy exemptions—including the homestead exemption—allow you to protect the property you will need to maintain a home and employment after bankruptcy.

Bankruptcy exemption amounts vary by state, so the amount you will be able to protect will depend on where you live and the type of bankruptcy you file (Chapter 7 or Chapter 13).

In Indiana, bankruptcy exemptions allow individuals to protect certain property from creditors when they file for bankruptcy. The homestead exemption in Indiana protects up to $19,300 of equity in your primary residence for an individual filer, and up to $38,600 for a couple filing jointly, as of the knowledge cutoff in 2023. This means that if the equity in your home does not exceed these amounts, it cannot be used to pay off creditors in a bankruptcy case. Indiana also offers other exemptions for personal property, such as a vehicle, work equipment, and retirement accounts, among others. The specific exemptions that apply and the amounts that can be protected will depend on the details of the bankruptcy case and whether the individual files under Chapter 7 or Chapter 13. It's important to note that federal bankruptcy exemptions are not available in Indiana; residents must use the state exemptions. An attorney can provide guidance on how to best use these exemptions to protect assets during bankruptcy.