Bankruptcy Exemptions in Illinois

Individuals may be able to legally retain certain assets when filing chapter 7 bankruptcy if they meet state or federal bankruptcy exemption requirements.  Generally, real estate mortgages and secured loans are exempt from bankruptcy.  The remaining assets can be sold in an effort to repay creditors any balances owed.  There are additional assets that may not be claimed exempt under state or federal bankruptcy rules.  Theses may include, but are not limited to, child or spousal support, back taxes and student loans.

All states have state bankruptcy exemptions available, and some have federal bankruptcy exemptions.  The state of Illinois, however, does not recognize federal bankruptcy exemptions.

How to Keep Your Car

One of the Illinois exemptions provided under the bankruptcy law may protect individuals from losing their automobile.

• Equity in an automobile is exempt up to $2400
• If the balance owed on an auto loan, if any, is less than the value of the vehicle, the vehicle may be exempt

Because an auto loan is a secured debt, the payments will still need to be made in order to keep the vehicle

How to Keep Your Home

It is common for individuals to file bankruptcy in an effort to prevent their home from going into foreclosure.  Although this may not be preventable, Illinois state law provides an exemption deduction for homes.  The exemption relates to the amount of equity in the home and whether or not it falls within the exemption amount.

• Illinois exemption is $15,000 (this includes farms, lots, buildings, condos, co-ops and mobile homes)
• If the property is not yet occupied, individuals must file a homestead declaration (a spouse or child of a deceased owner can claim homestead)
• Illinois recognizes tenancy by entirety

Filing Schedule C of a Bankruptcy Petition

A Schedule C (Property Claimed as Exempt form) lists the property you are claiming to be exempt and is required when you file bankruptcy.  Information to be included in the form is:

• The property being requested to be exempt and the applicable laws
• Value of the property

Should property be included on the report be misclassified, immediate action must be taken to correct the classification.

Get Advice from a Local Bankruptcy Attorney

Should you find yourself in a position of inability to repay excessive debt or be facing foreclosure of your home or repossession of your assets, Chapter 7 bankruptcy may be worth considering in order to restore your financial standing.  Because there are different types of bankruptcy and the process can be confusing, it is important to discuss your circumstances with a bankruptcy attorney.  An Illinois bankruptcy attorney knows the laws relative to this process and will assist you through the decision and filing process.