You Can Protect Some Or All Of Your Property When You File For Bankruptcy In Illinois
by Richard Fonfrias,
J.D. Chicago’s Financial Rescue &
Fonfrias Law Group, LLC
Depending on which type of bankruptcy you file, you can protect some or all of your property in Illinois.
Under Chapter 7 Bankruptcy, the trustee sells your nonexempt (not protected) property and pays your creditors with the funds he collects from the sale.
Under Chapter 13 Bankruptcy, the trustee does not sell any of your property. Instead, you keep your assets and set up a repayment plan of between three and five years to pay your creditors.
Illinois Requires That You Use State Bankruptcy Exemptions
If married couples file a joint bankruptcy, then they get to double the exemption amount if both of them own part of the asset.
FAQs Regarding Exemptions
Do I get to keep the exempt assets that I claim? Not necessarily. In most cases, you get to keep exempt property that you need to work at your job and in your household. This includes your tools, computer, home furnishings, clothing, and a modest equity in a vehicle. You must list your exemptions on Schedule C and file it with your bankruptcy paperwork.
Does someone look over my exemptions? Yes. The bankruptcy trustee — the court-appointed person assigned to your case — reviews your Schedule C to make sure you correctly listed your exemptions. If the trustee does not agree with your list of exemptions, he or she will try to work through the list with you to reach a new solution. If that doesn’t work, the trustee will file an objection in court and leave the decision as to whether the property is protected up to the bankruptcy judge.
What happens if I make an error? Most trustees won’t object unless you’re trying to get away with something. Instead, they’ll try to work out the matter with you first. If a trustee finds a small exemption problem, the trustee will likely call you to resolve the matter casually.
You should try not to falsify your bankruptcy forms. Bankruptcy fraud is punishable with a fine of up to $250,000, 20 years behind bars, or both.
Illinois State Bankruptcy Exemptions
You can protect equity in your home up to $15,000. This includes a farm, mobile home, condominium, cooperative, or a lot with buildings. This includes proceeds from the sale of a homestead for up to one year. If you own your home as tenants by the entirety, you may be able to protect more equity.
Motor Vehicle Exemption
You can protect equity in one motor vehicle up to $2,400.
You can keep other personal property (not real estate) not covered elsewhere with an added $4,000 wildcard exemption.
Alimony, Support, and Maintenance
You can protect an amount reasonably needed for support.
Cemeteries and Burial Funds
You can protect pre-need cemetery sales and future care funds.
Negligence or Torts
You can protect money paid to you for the wrongful death of a dependent to the extent reasonably necessary for your support. In addition, you can protect a personal injury award up to $15,000.
Crime Victim Compensation
You can protect all of an award for crime compensation.
Franchise, Permit, and License Interests
You can protect your liquor permit.
Fraternal Benefit Society Benefits
All fraternal society benefits are exempt.
You can exempt all life insurance, annuity proceeds, or cash value if the heir is the insured’s child, parent, spouse, or another dependent.
You can exempt all life insurance proceeds to a spouse or dependent of a filer to the extent needed for support.
You can exempt all health, disability, or unemployment benefits.
Illinois’ Uniform Partnership Act exempts a partner’s interest in specific property.
Pension and Retirement Benefits
You can exempt pensions for various employees, including police; General Assembly; firefighters; municipal employees; city, county, and state employees; laborer and retirement board employees; park employees; sanitary district employees; state university employees; teachers; judges; correctional employees; and public library employees. You can also exempt qualified retirement accounts.
You can protect the following personal property: necessary wearing apparel; bible and school books; family pictures; professionally prescribed health aids; title to any a watercraft over 12 feet long; prepaid tuition trust fund; Illinois College Savings Pool accounts invested more than one year before filing if below federal gift tax limit, or two years before filing if above.
You can protect all not-yet-received public assistance, including the earned income tax credit and child tax credit.
You can protect $1,500 in all tools of your trade, including professional books. You can also protect National Guard uniforms and guns.
You can protect all unemployment compensation except for certain child support claims.
You can protect the following amount of your wages: 85% of your gross earnings or 45 times the federal minimum hourly wage per week, whichever is greater.
You can protect all workers compensation, including claims and awards for occupational diseases.
You can protect all veteran’s benefits.
Please Note: Illinois adjusts the amounts of its exemptions occasionally, so to make sure you have the latest figures, please call me.