Can I Protect My Benefits and Pensions When I File for Bankruptcy?

Consumer bankruptcy often comes with many misconceptions, including that a debtor will lose all of her property when she files for an Illinois Chapter 7 bankruptcy.  Whether you’re filing for Chapter 7 or Chapter 13 bankruptcy in Illinois, our state has a set of exemptions that allow you to retain certain property when you file for bankruptcy.  While many Chicago residents are most concerned about the homestead exemption, which allows you to keep a certain value from your home, it’s also very important to understand how bankruptcy will affect your benefits and pensions.  
Can you protect pensions and benefits in bankruptcy?  In short, the answer is yes.  However, you should keep in mind that bankruptcy proceedings can be quite complicated, and it’s essential to have an experienced Oak Park bankruptcy lawyer on your side.  The Emerson Law Firm has years of experience assisting Chicago residents with consumer bankruptcies and can answer your questions today.
Protecting Your Pension with a Bankruptcy Exemption
What is a pension, exactly?  According to CNN Money, pensions are retirement accounts that are maintained by an employer.  When you retire, you get a fixed payout from your pension.  In other words, “it’s a kind of defined benefit plan” for retirement.  The amount each employee receives from a pension depends on a number of factors, including the length of your employment and your salary while you were employed.  Typically, pensions allow you to choose between a monthly payment during retirement or a single, lump-sum payment.
Pensions generally are 100 percent exempt during bankruptcy.  Specifically, Illinois law indicates that pensions from the following jobs are exempt:
·      General assembly members
·      Police officers
·      Firefighters, including disabled firefighters, widows of firefighters, and children of firefighters
·      State employees, including employees of state universities
·      Municipal employees
·      County employees
·      Civil service employees
·      Teachers
·      Judges
·      Park employees
·      Sanitation district employees
·      Corrections employees
·      Public library employees
·      Public employees generally
In addition, under Illinois law, all ERISA-qualified benefits and individual retirement accounts (IRAs) are exempt.  While Illinois law doesn’t specifically provide an exemption for tax-exempt retirement accounts like 401(k)s or 403(b)s, federal bankruptcy law does provide an exemption for these types of pensions.
Other Benefits Exemptions
Pensions aren’t the only kind of benefits that are exempt during bankruptcy.  Under Illinois law, debtors can also exempt the following benefits:
·      Public assistance benefits, such as medical assistance, benefits from the Supplemental Nutrition Assistance Program (SNAP), and Women, Infants, and Children (WIC) benefits
·      Workers’ compensation benefits, including awards and recoveries connected to occupational illness or injury. You can also exempt workers’ occupational disease compensation.
·      Social Security benefits
·      Unemployment benefits
·      Veterans’ benefits
·      Restitution payments, including those for Japanese Americans and Aleuts
·      Compensation and benefits for victims of crime
A Chicago bankruptcy attorney can help you to learn about the exemptions for which you might qualify when you file for personal bankruptcy.  While these benefits typically are those that are exempt under Illinois law, you may be eligible for other important exemptions that can help to protect certain assets when you file for a Chapter 7 bankruptcy.
Contact a Chicago Bankruptcy Lawyer
For many Illinois residents, consumer bankruptcy is a tool that can help to relieve the anxieties of serious debt.  If you are considering filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy, it’s extremely important to discuss your situation with a Chicago bankruptcy lawyer.  The laws governing bankruptcy in Illinois can be confusing, but the Emerson Law Firm can help you through this process.  Contact us today to learn more.
See Related Blog Posts:
Misconceptions About Consumer Bankruptcy in Chicago

Comments

Post a Comment

Popular posts from this blog

Payday Lending and Predatory Lenders in Illinois

If you are in substantial debt in the Chicago area and are living in a paycheck-to-paycheck cycle, you may have taken out a payday loan to make ends meet. While payday lending is illegal in a number of states due to the predatory nature of these loans, it remains legal in Illinois. As a result, many debtors in the state have used payday lenders, and far too many of those borrowers cannot repay what they owe. According to a recent article from Progress Illinois , consumers have filed complaints about payday lenders in the state, illuminating a need for federal rules that address harmful lending practices . Predatory Payday Lenders and Protections for Consumers Due to the perceived predatory nature of payday loans, twelve states in the country have banned these lenders from operating completely, according to a fact sheet from loans.org . The states that currently have laws prohibiting payday lenders from operating include Arkansas, Arizona, Connecticut, Georgia, Mary...
Read more

Phantom Debt Collection Scams on the Rise in Illinois

Have you been contacted by a person claiming to be a debt collector who is seeking to recover a debt you allegedly owe? If so, you are not alone. According to a recent report from CBS Chicago , such parties claiming to be debt collectors are on the rise, and they are scamming Chicago-area residents. These alleged debt collectors are part of schemes known as “phantom debt collection scams,” since they involve the attempt to collect on a debt that the consumer does not actually owe. How can you avoid becoming a victim in a debt-collection scam ? What should you do if you have been targeted by a fake debt collector? How Do Phantom Debt Collection Scams Work? Now, you might be thinking to yourself: I would never agree to make payment on a debt that I did not owe. But the scam is not always that simple. Parties at the center of debt-collection scams often target consumers who do actually owe debts (to someone or to some entity), and they prey on the fact that these c...
Read more

New Information on Debts That Bankruptcy Cannot Discharge

If you are thinking about filing for bankruptcy in the Oak Park area, it is important to know that certain kinds of debts cannot be discharged in a bankruptcy case. Under U.S. bankruptcy law, these are known as non-dischargeable debts, or exceptions to discharge. There are certain types of debts that have long been identified clearly as non-dischargeable debts, while there are misconceptions about other types of debts that may or may not be dischargeable. As an article in CNBC discusses, the U.S. Supreme Court recently issued a ruling in the case of Bartenwerfer v. Buckley , which clarifies that debts incurred due to another party’s fraud cannot be discharged in an individual’s bankruptcy case. Our Oak Park bankruptcy attorneys can explain the Court’s recent ruling and provide you with additional information on dischargeable and non-dischargeable debts. Supreme Court Says Debt Incurred Due to Another’s Fraud is Non-Dischargeable The recent Bartenwerfer case involved a debtor attempti...
Read more