2015 Indiana Code TITLE 32. PROPERTY ARTICLE 18. INTERESTS OF CREDITORS IN PROPERTY CHAPTER 1. ASSIGNMENT OF REAL AND PERSONAL PROPERTY FOR THE BENEFIT OF CREDITORS
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IC 32-18
ARTICLE 18. INTERESTS OF CREDITORS IN
PROPERTY
IC 32-18-1
Chapter 1. Assignment of Real and Personal Property for the
Benefit of Creditors
IC 32-18-1-1
Assignment of all debtor's property in trust for creditors;
fraudulent and void assignments; trustees
Sec. 1. (a) A debtor who is in embarrassed or failing
circumstances may make a general assignment of all the debtor's
property in trust for the benefit of all the debtor's bona fide creditors.
(b) Except as provided in this chapter, an assignment described in
subsection (a) that is made after March 19, 1859, is considered
fraudulent and void.
(c) A debtor who is:
(1) in embarrassed or failing circumstances; and
(2) making a general assignment of all the debtor's property as
provided in this chapter;
may select the debtor's trustee. The trustee shall serve and qualify,
unless creditors representing an amount of at least one-half (1/2) of
the liabilities of the debtor petition the court for the removal of the
trustee and the appointment of another trustee. If the petition is filed,
the judge of the circuit or superior court in which the debtor resides
shall immediately remove the trustee and appoint a suitable
disinterested party to act as trustee in place of the removed trustee.
(d) This chapter may not be construed to prevent a debtor from
preferring a particular creditor by an assignment not made under this
chapter that:
(1) conveys less than all of the debtor's property;
(2) is made for the benefit of less than all of the debtor's
creditors; or
(3) is made by other means;
if the action is taken in good faith and not as a part of, or in
connection with, a general assignment made under this chapter.
However, a corporation may not prefer any creditor if a director of
the corporation is a surety on the indebtedness preferred or has been
a surety on the indebtedness within four (4) months before the
preference.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-2
Filing indenture of assignment with county recorder; description
of property; oaths of assignor
Sec. 2. (a) An assignment under this chapter must be:
(1) by indenture; and
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(2) signed and acknowledged before a person who is authorized
to take the acknowledgment of deeds.
(b) The indenture must, within ten (10) days after the execution,
be filed with the recorder of the county in which the assignor resides.
The recorder shall record the indenture of assignment the same as
deeds are recorded.
(c) The indenture of assignment must:
(1) contain a full description of all real estate assigned; and
(2) be accompanied by a schedule containing a particular
enumeration and description of all the personal property
assigned.
(d) The assignor shall make oath before a person authorized to
administer oaths. The oath must:
(1) verify the indenture and schedule and contain a statement of
all the property, rights, and credits belonging to the assignor, or
of which the assignor has knowledge, and that the assignor has
not, directly or indirectly, transferred or reserved a sum of
money or article of property for the assignor's own use or the
benefit of another person; and
(2) indicate the assignor has not acknowledged a debt or
confessed a judgment to a person for a sum greater than was
justly owing to the person, or with the intention of delaying or
defrauding the assignor's creditors.
(e) An assignment under this chapter may not convey to the
assignee an interest in property assigned until the assignment is
recorded as provided in this section.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-3
Trustee; duties on execution of assignment; bond
Sec. 3. (a) Not later than fifteen (15) days after the execution of
the assignment, the trustee shall file a copy of the assignment and
schedule in the office of the clerk of the circuit court of the county in
which the debtor resides. The trustee shall state under oath, before
execution of the trust:
(1) that the trustee will faithfully execute the trust, and the
property assigned has been actually delivered into the trustee's
possession for the uses declared in the assignment; and
(2) what the probable value of the assigned property is.
(b) The trustee shall, at the time the assignment and schedule is
filed under subsection (a), file with the clerk a written undertaking to
the state with at least one (1) sufficient surety. The bond to be
approved by the clerk:
(1) must be in a sum double the amount of the value of the
property assigned; and
(2) conditioned for the faithful discharge of the duties of the
trustee's trust.
The bond must be for the use of a person injured by the action of the
trustee.
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As added by P.L.2-2002, SEC.3.
IC 32-18-1-4
Circuit court clerk's recording of filing of indenture, schedule, and
undertaking
Sec. 4. The clerk of the circuit court shall minute the filing of the
copy of indenture, schedule, and undertaking in the proper book
under section 3 of this chapter.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-5
Trustee; removal upon petition of assignor or creditor
Sec. 5. (a) If the trustee fails to comply with the provisions of
sections 1 through 4 of this chapter, the judge of the circuit court or
the clerk of the circuit court may, at the instance of the assignor or a
creditor, by petition:
(1) remove the trustee; and
(2) appoint another suitable person as trustee.
(b) A replacement trustee shall:
(1) comply with the requirements specified in this chapter;
(2) immediately take possession and control of the property
assigned; and
(3) enter upon the execution of the trust, as provided in this
chapter.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-6
Trustee; notice of appointment; inventory of property
Sec. 6. (a) Immediately after complying with the requirements set
forth in this chapter, the trustee shall give notice of the trustee's
appointment by publication, three (3) weeks successively, in a
newspaper printed and published in the county. If a newspaper is not
printed and published in the county, the trustee shall:
(1) place written notice in at least five (5) of the most public
places in the county; and
(2) publish notice in a newspaper printed and published in the
nearest county, for the time and in the manner mentioned in
reference to publication in the county where the assignor
resides.
(b) The trustee shall, within thirty (30) days after beginning the
duties of the trust, make and file, under oath, a full and complete
inventory of all the property, real and personal, the rights, credits,
interests, profits, and collaterals that the trustee obtains, or of which
the trustee may have obtained knowledge as belonging to the
assignor. If:
(1) any property not mentioned in an inventory comes into the
trustee's hands; or
(2) the trustee obtains satisfactory information of the existence
of property not mentioned in an inventory;
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the trustee shall file an additional inventory of the property as
described in this section.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-7
Appraisers; oath required
Sec. 7. The trustee, not more than twenty (20) days after filing the
inventory mentioned in section 6 of this chapter, shall cause the
property mentioned in the inventory to be appraised by two (2)
reputable householders of the neighborhood. The appraisers, before
proceeding to discharge their duty, must take and subscribe an oath
that they will honestly appraise the property mentioned in the
inventory filed by the trustee. The oath must be filed, together with
the appraisement, with the clerk of the circuit court.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-8
Appraisal of property
Sec. 8. The appraisers shall, in the presence of the trustee:
(1) appraise each article mentioned in the inventory at its true
value; and
(2) set down opposite each article respectively the value fixed
by them in dollars and cents.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-9
Appraisal; set off to resident household assignor
Sec. 9. (a) If the assignor is a resident householder of Indiana, the
appraisers shall set off to the assignor articles of property or so much
of the real estate mentioned in the inventory as the assignor may
select, not to exceed three hundred dollars ($300).
(b) The appraisers shall, in an appraisement, specify what articles
of property and the value of the property, or what part of the real
estate and its value, they have set apart to the assignor.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-10
Sale of property; partition of land
Sec. 10. (a) The trustee, as soon as possible after an appraisement
is filed, shall collect the rights and credits of the assignor. Except for
property set off by the assignor as exempt, the trustee shall sell at
public auction the appraised property after giving thirty (30) days
notice of the time and place of sale:
(1) by publication in a newspaper printed and published in the
county; or
(2) if a newspaper is not printed and published in the county, by
posting written or printed notices in at least five (5) of the most
public places in the county.
(b) The trustee shall sell the appraised property to the highest
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bidder for cash, or upon credit, the trustee taking notes with security
to be approved by the trustee, waiving relief from valuation or
appraisement laws, payable not more than twelve (12) months after
the date, with interest.
(c) The trustee must make a full return, under oath, of the sale to
the clerk of the circuit court. The clerk shall file the return with the
other papers in the case. However, a court may, upon the sworn
petition of the trustee, a creditor, or the assignor, for good cause
shown, extend the time for selling the property, or any part of the
property, for as much time as the court determines will serve the best
interests of the creditors. The court may extend the credit on sales for
not more than two (2) years.
(d) The court may, upon the sworn petition of the trustee or of a
majority of the creditors showing that the property may deteriorate in
value by delay or that it will be beneficial to the creditors to have an
early sale order the property sold upon notice of the time, place, and
terms of sale, and in a manner the court determines is best.
(e) The court may authorize the property sold at private sale at not
less than its appraised value if it is shown that a private sale would be
beneficial to the creditors of the assignor. The court shall supervise
the estate of the assignor and may make all necessary orders in the
interest of the creditors for its control and management by the trustee
before the sale. In the interest of all parties, the court may upon
petition of the assignee, if the wife of the assignor is a party to the
petition, order partition of the land of the assignor, before sale,
between the assignee and wife of the assignor. The court shall set off
to the wife her inchoate one-third (1/3) in the land before sale. If the
court finds that the land cannot be partitioned without detriment to
the interest of the creditors of the assignor, the court may make an
order directing the sale of all the land conveyed to the assignee by the
assignor, including the wife's one-third (1/3) inchoate interest. The
one-third (1/3) of the money for which the land is sold shall be paid
to the wife of the assignor when collected. The assignee shall, after
sale, compel the trustee to report the money in the trustee's hands for
distribution, and shall compel the money to be paid into court for
distribution if the assets are shown to be sufficient to pay a ten
percent (10%) dividend upon the indebtedness. The distribution may
be ordered from time to time when, on application of any person
interested, it is shown to the court that there is sufficient funds in the
hands of the trustee to pay the dividend of ten percent (10%).
As added by P.L.2-2002, SEC.3.
IC 32-18-1-11
Report of trustee
Sec. 11. The trustee shall, within six (6) months after beginning
the duties of the trust, report to the judge of the circuit court, under
oath:
(1) the amount of money in the trustee's hands from:
(A) the sale of property; and
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(B) collections; and
(2) the amount still uncollected.
The trustee shall also, in the report, list all claims of creditors that
have been presented to the trustee against the assignor. The trustee
shall denote the claims that the trustee concludes should be allowed
and those that the trustee determines not to allow.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-12
Trial of disallowed claims
Sec. 12. The clerk of the court shall spread the report and list upon
the appearance docket of the court. The clerk shall distinguish
between the claims the trustee has determined to allow and the claims
the trustee has refused to allow. In all cases in which the trustee has
refused to allow a claim, and in which a creditor objects to the
allowance of the claim of another creditor, the judge may order the
case to stand for trial at the next term of the court. The trial shall be
governed by the rules regulating the trials of similar actions in the
circuit court. If, after trial of the claim, the court is satisfied that the
claim is valid and just, the court shall order the claim to be allowed
and paid as other similar claims are paid. The court shall also make
an order with respect to costs as the court considers just.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-13
Lien or encumbrance on property sold
Sec. 13. (a) A part of the property assigned on which there are
liens or encumbrances may be sold by the trustee subject to the liens
or encumbrances.
(b) However, if the trustee is satisfied that the general fund would
be materially increased by the payment of the liens or encumbrances,
the trustee shall make application, by petition, to the judge of the
circuit court for an order to pay the liens and encumbrances before
selling the property. Before the holder of any lien or encumbrance is
entitled to receive any part of the holder's debt from the general fund,
the holder shall proceed to enforce the payment of the debt by sale,
or otherwise, of the property on which the lien or encumbrance
exists. For the residue of the claim, the holder of the lien or
encumbrance shall share pro rata with the other creditors, if entitled
to do so under Indiana law.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-14
Distribution of money in possession of trustee
Sec. 14. If the court confirms the report made as provided under
section 11 of this chapter and if no contested claims are standing on
the docket as provided under section 12 of this chapter, the court
shall order the trustee to pay all money in the trustee's hands to the
clerk of the court. The clerk, after deducting the costs incident to the
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execution of the trust, including an allowance to the trustee as the
court considers just, shall:
(1) distribute the money among the creditors according to this
chapter; and
(2) take receipts from each creditor.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-15
Examination of assignor or transferee
Sec. 15. (a) If a creditor or the trustee, by verified petition, asks
the court for the examination of the assignor or any person to whom
any part of the person's property has been transferred within six (6)
months before the assignment, the circuit or superior court may issue
an order for the examination of:
(1) the assignor;
(2) a person or officer of a corporation to whom a transfer is
believed to have been fraudulently made;
(3) a a person or officer of an association to whom a transfer is
believed to have been fraudulently made; and
(4) a person alleged to have been concerned in the transfer.
(b) A person described in subsection (a) may be brought before the
court and, on oath, be compelled to answer all questions put to the
person pertinent to the alleged transaction. The court may stay further
transfers and subject property that has been fraudulently withheld or
transferred to the operation of the general trust. The assignor or
person shall be interrogated or be compelled to answer all questions
concerning the disposition of the property of the assignor. The
assignor may be interrogated and compelled to answer all questions
concerning the management of the assignor's business and affairs for
the six (6) months before the assignment. The assignor shall be
compelled to produce all books, papers, and accounts in reference to
the assignor's business affairs during the six (6) months preceding the
assignment.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-16
Oath of persons filing claims
Sec. 16. A person who files a claim with the trustee must make
oath that the claim is just and lawful and no part of the claim is for
usurious interest. If a claim or part of a claim is for usurious interest,
it must be deducted from the claims before they are allowed. The
trustee may administer an oath to a creditor in reference to the
validity and justice of a claim.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-17
Debt or claim belonging to assignor; compounding or
compromising
Sec. 17. A trustee may compound or compromise a debt or claim
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belonging to the assignor that cannot be otherwise recovered without
endangering the recovery of the claim or debt.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-18
Trustee; final report; discharge from trust
Sec. 18. (a) The trustee shall, at the expiration of one (1) year after
entering upon the duties of the trust or at the next term of the court
after the expiration of one (1) year after entering upon the duties of
the trust, make a final report to the court.
(b) After a hearing and determination, if the judge is satisfied with
and approves the report, the judge shall order the trustee to be
discharged from the trust. However, the judge may, for good cause
shown, grant further time to the trustee to file a final account.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-19
Trustee; removal; vacancy
Sec. 19. (a) The judge of the circuit court may, upon the petition
of a creditor or the assignor, remove a trustee under this chapter for
good cause shown and appoint a successor.
(b) If a vacancy occurs by death, resignation, or removal of a
trustee from Indiana, the judge may fill the vacancy and shall order
a trustee who is removed to surrender all property in the trustee's
hands belonging to the trust to the successor. The court may require
a trustee removed under this section to pay to the clerk of the court
all money in the trustee's hands, and on or before the next term, the
trustee shall make and file a full and final report showing the
condition of the trust and the trustee's management of the trust while
under the trustee's control. If the court is satisfied with the report and
the trustee has fully complied with this chapter and paid all money in
the trustee's hands to the clerk of the court, the court may discharge
the trustee.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-20
Right to appeal
Sec. 20. This chapter may not be construed to prevent a party
aggrieved by an order or decree of the court under this chapter from
having an appeal as in other civil actions.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-21
Fees allowed clerk of court; compensation of appraisers and trustee
Sec. 21. (a) For whatever services the clerk of the circuit court is
required to perform under this chapter, the clerk is allowed the same
fees as are allowed the clerk by law for similar services in other civil
proceedings.
(b) The appraisers under this chapter are entitled to one dollar ($1)
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per day each for their services.
(c) The judge shall remunerate the trustee for the trustee's services
in executing the trust out of the general fund as the judge considers
just and proper.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-22
Power of surviving partner to make assignments
Sec. 22. A surviving partner of a firm doing business in Indiana
has full power to make assignments under this chapter.
As added by P.L.2-2002, SEC.3. Amended by P.L.1-2003, SEC.80.
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