Legal Question in Real Estate Law in Indiana

Yes. It should be structured so that payments under the contract go towards the L of C.

It would be a very bad idea for you to sell a property on contract which is encumbered by a debt. You would need to have this situation handled by an attorney and you would have to set up proper escrow and accounting to ensure that the line of credit was paid off in time for the eventual transfer. Not many people could pull this off.