Indiana Credit Laws

Indiana residents receive a number of credit- and debt-related rights under federal laws as well as state codes like the Indiana Uniform Consumer Credit Code. Consumer credit relates to contracts such as credit card bills and bank loans, according to the Indiana Department of Financial Institutions. Federal and state laws are harsher when people owe child support, alimony, court fines and tax bills less than three years old, warns the book "How to File for Chapter 7 Bankruptcy."

Costs of Credit

You have the right to know all costs associated with a credit account in advance of accepting it, according to the Indiana Uniform Consumer Credit Code. Applicable costs include interest rates, potential penalties, annual fees, maintenance fees, late fees and over-the-limit fees. You can also choose not to use credit if you disagree with the fees, especially regarding contracts made through door-to-door sales.

Interest Rate Caps

Creditors doing business in Indiana cannot charge excessively high interest rates, notes the state Department of Financial Institutions. As of 2011, the legal maximum interest rate was 36 percent on amounts financed up to $990. No more than 21 percent interest can be assessed on balances ranging from $990.01 to $3,300.

Credit Reporting

Your bill-paying history is reported to major credit bureaus and creates a credit report, according to the Indiana Department of Financial Institutions. But creditors cannot legally report information such as your religion, race, political party and sexual preference. If you don't pay your bills on time, a negative entry on your credit report results; these last from seven to 10 years depending upon the type of late payment or collection account. On-time payments positively impact your credit rating for the life of the account and up to 10 years from the date of account closure.

The Bankruptcy Option

Some credit obligations become too overwhelming and the consumer must file bankruptcy, according to the U.S. Bankruptcy Court, Northern District of Indiana. Most people elect to file Chapter 7 or Chapter 13, notes the book "How to File for Chapter 7 Bankruptcy." Chapter 7 allows permanent forgiveness of pre-existing consumer credit obligations, while Chapter 13 is a partial debt repayment plan that lasts three to five years. Family farmers can partially repay their debts in Chapter 12, while self-employed people and business owners can combine personal and business debts into a Chapter 11 repayment plan.

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