Less Common Bankruptcy Exemptions That Could Apply to Your Case

Bankruptcy exemptions are important in both Chapter 7 and Chapter 13 consumer bankruptcy cases. While you might already know about some bankruptcy exemptions in Illinois such as the homestead exemption or automobile exemption, there are a wide range of bankruptcy exemptions that could be applicable to your case. Our Oak Park bankruptcy lawyers want to provide you with more information about some of the less common bankruptcy exemptions that exist in Illinois that could help with your case.

How Bankruptcy Exemptions Work in Consumer Cases

Before we discuss some of the less common bankruptcy exemptions that are important for you to know and consider, we want to make sure you understand how these exemptions work. In a Chapter 7 bankruptcy case involving consumer debt, exemptions allow the individual or married couple filing for bankruptcy to exempt certain assets from liquidation. Since Chapter 7 bankruptcy is a type of liquidation bankruptcy, all non-exempt assets will be liquidated so that creditors can be repaid a portion of the debts they are owed and the debtor can have his or her eligible debts discharged. To be clear, a debtor does not lose all of his or her assets in a Chapter 7 bankruptcy case since bankruptcy exemptions allow the debtor to exempt various types of property.

In a Chapter 13 bankruptcy case, exemptions work differently but are still important. Since Chapter 13 bankruptcy is a type of reorganization bankruptcy (and not a type of liquidation bankruptcy), exemptions do not prevent exempt assets from being liquidated. Rather, exemptions determine which assets do not have to be included when the debtor is developing a repayment plan for his or her Chapter 13 bankruptcy case that will last from three to five years.

Learning About Lesser Known Bankruptcy Exemptions

When a debtor files for bankruptcy in Illinois, she or he must use the Illinois exemptions. Some of those exemptions are commonly known, such as the homestead exemption (for exempting equity in your home) or the motor vehicle exemption (for exempting equity in a motor vehicle). Yet there are other exemptions under Illinois law. Some that may be applicable to your case that you may not know about include, for example:
  • Wildcard exemption (up to $4,000 of personal property of your choosing—one or two luxury items or many smaller-value items);
  • Pre-paid burial costs;
  • Life insurance proceeds;
  • Unemployment benefits;
  • Retirement benefits and pensions;
  • Necessary clothing;
  • Bible;
  • Books for school;
  • Family photos;
  • Health aids;
  • Prepaid tuition funds;
  • Public assistance benefits;
  • Tools you need for your trade, which can include books;
  • Portion of your wages;
  • Workers’ compensation benefits; and
  • Veterans benefits.
You should be sure to discuss other possible exemptions with your bankruptcy lawyer. There may be additional exemptions that can allow you to exempt specific assets whether you are filing for Chapter 7 or Chapter 13 bankruptcy.

Contact an Oak Park Bankruptcy Lawyer

Do you have questions about Illinois bankruptcy exemptions or how they will apply to your case? One of our Oak Park bankruptcy attorneys can provide you with more information today. Contact the Emerson Law Firm to discuss your bankruptcy case.


See Related Blog Posts:

CFPB Report Addresses Consumer Medical Debt

Preparing for Your Meeting with a Bankruptcy Attorney

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