Common Bankruptcy Exemptions to Know About

What are exemptions in bankruptcy cases? If you are considering bankruptcy, you should first learn about how exemptions work. Under the Bankruptcy Code, exemptions allow debtors to be “exempt from property of the estate,” which means that debtors can exempt the value of certain assets from the bankruptcy estate. Exemptions work differently in Chapter 7 and Chapter 13 cases for individuals. In Chapter 7 cases, exemptions allow debtors to exempt assets from the estate for liquidation (in other words, you can keep the exempt property). According to the American Bankruptcy Institute (ABI), a majority of Americans who file for bankruptcy are able to exempt all or nearly all of their property in a Chapter 7 bankruptcy case. In a Chapter 13 case, given that assets are not liquidated, exemptions play a role in determining the monthly and total amount of debt that must be repaid over the course of the bankruptcy case.

Some bankruptcy exemptions are used more frequently than others, so it is important to talk with one of our Oak Park bankruptcy attorneys about the specifics of your case to determine which exemptions may apply to you. In the meantime, we can provide you with more information about some of the more common bankruptcy exemptions in Illinois.

Homestead Exemption

Debtors in Illinois must use bankruptcy exemptions set forth under Illinois statutory law (as opposed to having a choice between federal exemptions and Illinois state exemptions). The homestead exemption allows a debtor to exempt equity in their residence up to $15,000. That exemption doubles to $30,000 for married debtors filing a joint bankruptcy petition.

Vehicle Exemption

Under Illinois law, you can exempt up to $2,400 in a motor vehicle.

Pensions and Retirement Accounts

For many Illinois residents, the entirety of their pensions and retirement accounts will be exempt. A bankruptcy attorney can assess your specific financial circumstances to let you know what to expect.

Wildcard Exemption

There is a “wildcard exemption” in Illinois that allows debtors filing for bankruptcy to exempt up to $4,000 of any item or items they choose. It can be a single item worth $4,000 or multiple items worth a total of $4,000.

Personal Property Exemption

Many forms of personal property are exempt, including necessary apparel, school books, family photos, health aids, and certain savings accounts.

Wages Exemption

You can exempt 85% of your gross wages, or 45 times the total of the federal minimum hourly wage (whichever amount is higher).

Trade Tools Exemption

Consumers who file for bankruptcy can exempt up to $1,500 of tools that they need for their work or trade, including books.

Public Benefits Exemptions

Many forms of public benefits are entirely exempt, such as unemployment benefits, veterans' benefits, and workers’ compensation benefits.

Contact an Oak Park Bankruptcy Lawyer

Do you have questions about consumer bankruptcy in general or specific inquiries concerning bankruptcy exemptions? It is important to get in touch with an experienced Oak Park bankruptcy attorney who can assist you. Our firm has years of experience serving consumers, and we can answer your questions about bankruptcy today. Contact the Emerson Law Firm today for more information.



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