Can I File for Bankruptcy in Illinois if I Recently Moved to Chicago?

If you moved to Chicago relatively recently from another city outside of Illinois, are you eligible to file for personal bankruptcy in Illinois? If you are eligible to file for consumer bankruptcy in the Chicago area, will Illinois’s bankruptcy exemptions apply to your case? These are extremely important questions to ask, and it is important to learn the answers in your specific situation by speaking with an Oak Park bankruptcy attorney.
The place in which you file for bankruptcy—and the state’s exemptions that you use—can make an enormous difference in your case. As such, it is necessary to understand how moving can impact a Chapter 7 or Chapter 13 bankruptcy filing.
Where Do I File for Bankruptcy After I Have Moved?
The answer to this question largely depends upon how long you have been living in your current location. In general, bankruptcy law (28 U.S.C. § 1408(1)) typically requires that a debtor has been domiciled (or has resided in) a state for the majority of the 180 days prior to filing for bankruptcy (which, in practice, means at least 91 days). However, the bigger and more significant question often is not whether you can file in Illinois at all, but whether Illinois bankruptcy exemptions will apply to your case. In other words, will you be able to use Illinois’s bankruptcy exemptions? Or will you need to use the state’s bankruptcy exemptions where you lived previously? Or, alternate to those two scenarios, will you only have access to the federal bankruptcy exemptions?
To be able to use the exemptions of the state in which you are currently living, bankruptcy law (11 U.S.C. § 522) requires you to live in your current state for 730 days before filing if you are to use that state’s bankruptcy exemptions. In other words, if you have moved to Chicago from another state and want to use Illinois’s bankruptcy exemptions, you will need to have lived in Illinois for 730 days prior to seeking bankruptcy protection. Otherwise, the law says that you will need to use the exemptions of the state you lived in for the majority of the 180-day period prior to the 730-day period before you filed for bankruptcy.
This can get confusing. In short, if you have not lived in Illinois for 730 prior to filing for bankruptcy—even if you file for bankruptcy in this state—you will need to use the exemptions of the state in which you lived for about two and a half years before you filed for bankruptcy. Depending upon whether the state from which you moved has “opted out” from federal bankruptcy exemptions or allows the use federal bankruptcy exemptions, you either will need to use the state-specific exemptions or federal exemptions.
Pros and Cons of Illinois Bankruptcy Exemptions
For states like Illinois that have “opted out” of federal bankruptcy exemptions, the exemptions can vary widely and can have a dramatic impact on your case.
What do we mean by “opted out”? Under Illinois law (735 ILCS § 5/12-1201), residents of Illinois who file for bankruptcy are “prohibited from using the federal exemptions” when seeking bankruptcy relief. As such, Illinois residents who file for bankruptcy will be required to use the Illinois state exemptions.
How can the exemptions you are required to use make such a big difference? For instance, the federal homestead exemption is $23,675, while the Illinois homestead exemption is only $15,000 (735 ILCS § 5/12-901). In other words, a debtor can exempt an additional $8,675 in equity in a home by using the federal exemption as opposed to the Illinois state exemption.
Contact a Bankruptcy Attorney in the Chicago Area
There are many additional examples of how federal and state-specific exemptions vary, and it is important to discuss your situation with a Chicago bankruptcy lawyer prior to filing for bankruptcy. Contact the Emerson Law Firm today.
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