Bankruptcy Exemptions

Illinois bankruptcy exemptions apply to property you can exempt or protect from creditors when you file bankruptcy. These include:

§  Homestead related, such as real estate up to $15,000 and sale proceeds exempt up to one year (husband and wife may double the amount)

§  Personal property such as a car (up to $2,400), needed clothing, health aids, proceeds of sold (exempt) property, personal injury/wrongful death recoveries

§  Health and disability, life insurance annuities or a term life policy

§  Alimony or child support payments

§  Pensions, including most city and state sponsored programs

§  Public program benefits such as Social Security, veteran’s benefits, worker’s compensation and most other forms of public assistance

§  $4,000 worth of miscellaneous personal property

Exemption limits apply to any equity you have in property. Equity is the difference between the value of the property and what you still owe on the property.  If the property is secured by a loan, such as a car or home, and you are current on the payments, the equity is covered by your exemptions.  If you elect to keep making payments on the loan you generally can keep this property through the bankruptcy. If all the equity is not covered by your exemptions the trustee may elect to liquidate this asset and distribute the proceeds. Generally, in this case, you would be entitled to the value of your exemption in the asset as a cash payment.

Bankruptcy law allows married couples filing jointly to each claim a full set of exemptions, unless otherwise noted.

To keep non-exempt property, a debtor must generally pay the trustee the value of the non-exempt property.

When you file bankruptcy in Illinois you may also use federal exemptions. These include virtually all retirement benefits for federal employees, plus such survivor’s (or death and disability) benefits.   Some military bank deposits (for those on overseas duty) and military group life insurance benefits also apply.