What Property Will I be Able to Keep if I File for Bankruptcy?

If you are considering consumer bankruptcy, then you may be wondering how a personal bankruptcy filing will impact the belongings you currently have. For example, will you be able to keep your house, or does all of the equity in your home need to be turned over to the bankruptcy trustee? Can you keep your motor vehicle? How do bankruptcy courts handle property that has sentimental value, such as family photos or jewelry that you consider to be a family heirloom? The amount and kind of property that you will be able to keep if you file for bankruptcy depends upon the type of bankruptcy you are filing for, and then it depends upon the kind of property you have and want to retain according to Illinois’s bankruptcy exemptions. Let us explain in more detail.

If You File for Chapter 13 Bankruptcy
If you are planning to file for Chapter 13 bankruptcy, you should know immediately that this is not a liquidation bankruptcy. To be clear, you will not need to liquidate your property up front in order to repay creditors. Rather, this is a type of reorganization bankruptcy in which you have an opportunity to reorganize your debts and to repay creditors over a period of time. As such, Chapter 13 bankruptcy can actually allow you to keep a very important type of property that you could be at risk of losing due to foreclosure — your home. Unlike Chapter 7 bankruptcy, a Chapter 13 bankruptcy can allow a debtor to get back on track with monthly mortgage payments, to avoid foreclosure, and ultimately to stay in the home.

So, if you are planning to file for Chapter 13 bankruptcy, the Illinois bankruptcy exemptions are less important up front. Your bankruptcy lawyer can explain in more detail when the exemptions might come into play in your case.

Filing for Chapter 7 Bankruptcy and Liquidating Non-Exempt Assets
When you file for Chapter 7 bankruptcy, this is a liquidation bankruptcy. Accordingly, any non-exempt property will be liquidated (sold) in order to repay creditors so that your debts can be discharged. Now, what type of property is exempt in Illinois? In other words, what property will you be able to keep if you file for Chapter 7 bankruptcy? The following is a list of some of the Illinois bankruptcy exemptions that may be applicable to you. There are others, so do not assume that this is a complete list. You should speak with an Oak Park bankruptcy attorney about your specific situation to determine which Illinois personal property bankruptcy exemptions may apply to you or may be useful to you. Here are some of those exemptions:
  • Homestead exemption: Keep up to $15,000 in equity in your home;
  • Motor vehicle exemption: You can keep up to $2,400 in a motor vehicle;
  • Wildcard exemption: You can keep up to $4,000 in any personal property you want that is not real estate—you can use it all for a single item or spread it out over multiple items;
  • Personal injury award exemption: Up to $15,000;
  • Pensions and retirement accounts: Many are 100% exempt;
  • Clothes: Necessary apparel is completely exempt;
  • Family photos: You can keep all of these;
  • School books: These are entirely exempt;
  • Tools for your trade: Whether you use physical tools or professional books to complete your work, you can exempt up to $1,500 of these;
  • Workers’ compensation benefits: You can keep all of these benefits; and
  • Veteran’s benefits: These benefits are completely exempt.
Contact an Oak Park Bankruptcy Lawyer

Do you have questions about exempting property in your bankruptcy case? An experienced Oak Park bankruptcy attorney can assist you. Contact the Emerson Law Firm to speak with a consumer protection advocate at our firm today.


See Related Blog Posts:

What Role Does Mortgage Debt Play in Consumer Debt?



10 Things You Should Know About Consumer Bankruptcy

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