In Indiana, is the equity in your home protected from legal action in the event of a lawsuit? That is, I was told that one's home is covered under the "homestead exemption" act and therefore protected from being liquidated from a court judgement. Is this true and/or where can I find more info on this subject?
1 Answer from Attorneys
It depends on who the lawsuit is against and the nature of the ownership interest in the real estate. Also, it depends upon whether you reside in the home.
If the lawsuit is against you and your home is owned by you and your wife as tenants by the entireties, (ownership by husband and wife as a marital entity) then the real estate is totally exempt.
If you own it either solely or as tenants in common, then you have a $7500 exemption. If the real estate is worth more than $7500 more than the total of any prior liens against it, then it may be sold.
If the lawsuit is against both you and your wife and the real estate is owned by both, then you each get an exemption for $7500 for a total of $15,000.
If you do not live in the real estate then change each of the above $7500 figures to $4,000.
One more thing. The exemptions are not automatic, you must file a petition requesting them. If you don't, you waive them.
One more thing. Sale of the house as a result of a judgment might be blocked by filing bankruptcy. And it is not called a homestead exenption. That has to do with property taxes.