What is the Difference Between Federal and Illinois Exemptions in Bankruptcy?

If you are thinking about filing for consumer bankruptcy in Oak Park, Illinois, it is important to know what property you will be able to exempt if you are planning to file for liquidation bankruptcy. Many debtors choose to file for Chapter 7 bankruptcy, which is a liquidation bankruptcy. Given that this type of bankruptcy allows debtors to get a fresh start relatively quickly, it is often preferable. Assuming that you are eligible for Chapter 7 bankruptcy—you will need to be able to pass the “means test” in order to be eligible—all of your property that is not exempt will be liquidated in order to repay creditors.

Running a quick internet search for bankruptcy exemptions is likely to result in information about both federal bankruptcy exemptions and state bankruptcy exemptions. We want to provide you with more information about how exemptions work in an Illinois bankruptcy and to be clear about the exemptions you can use: Illinois residents filing for bankruptcy must use Illinois exemptions and can not use federal exemptions.

Illinois Residents can Not Choose Between Federal and State Bankruptcy Exemptions
Some states allow residents filing for bankruptcy to choose whether they want to use federal exemptions or state exemptions. While a majority of states require residents to use the state exemptions, there are some states that still give residents the choice. In states where a debtor can choose, the best exemptions largely will depend upon the type of property that the debtor wants to exempt and the total amount of property that the debtor wants to exempt. For example, some states have generous homestead exemptions that allow a debtor to exempt all equity in a home, while debtors without real property might choose federal exemptions in order to exempt more of another type of property.

Yet Illinois is not one of those states that allows a debtor to choose. Currently, the only states that allow a debtor to decide between using federal and state exemptions are Alaska, Arkansas, Connecticut, Hawaii, Kentucky, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Washington, Wisconsin, and the District of Columbia.

Illinois Bankruptcy Exemptions

Given that you will be required to use Illinois bankruptcy exemptions if you file for bankruptcy in Illinois, it is important to know what some of those exemptions include. Under Illinois law, the following are examples of exemptions:
  • Homestead exemption: $15,000;
  • Motor vehicle exemption: up to $2,400 in equity;
  • Personal property, including clothing, health aids, books, family photos, and other items: up to $15,000;
  • Trade tools, including tools, books, and other implements: up to $1,500;
  • Pensions;
  • Public benefits;
  • Workers’ compensation;
  • Veterans’ benefits;
  • Social Security benefits;
  • Life insurance;
  • Health and disability benefits; 
  • Spousal maintenance; and
  • Child support.
There may be other exemptions available that a bankruptcy lawyer can discuss with you.

Contact an Oak Park Bankruptcy Lawyer

If you have questions about what property you can exempt in a personal bankruptcy, it is important to speak with an Oak Park bankruptcy attorney about your case. Contact the Emerson Law Firm to discuss your questions.


See Related Blog Posts:

New Study Links Majority of Bankruptcies to Medical Debt
U.S. Supreme Court Will Consider Collection Actions Against a Bankruptcy Debtor

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