What Are Your Exemptions?

In a Chapter 7 case, the Bankruptcy Code essentially takes all of the Debtor’s property and sells it to satisfy as much of the Debtor’s obligations as possible. Since the creditors usually get less than they are owed, the Bankruptcy Code does not permit the Debtor to keep anything of value.

However, the Bankruptcy Code acknowledges that the Debtor should be permitted to keep certain assets, such that the Debtor may get back on her feet, or because those assets may have more sentimental value to the Debtor than monetary value to the creditors.

Most states’ laws provide for the “exemption” of certain types of property from creditors. The Bankruptcy Code provides that a debtor may choose to take advantage of the state law which applies, or may instead choose the exemptions provided by the Bankruptcy Code. The Bankruptcy Code also provides that state law may prohibit a debtor from electing the exemptions provided under the Bankruptcy Code, and restrict exemptions to those provided under state law.

Illinois has opted out of the Bankruptcy Code’s exemptions, and has instead provided its own exemptions. The exemptions provided under Illinois law generally include:

  • Up to $15,000 of value of residential real estate, whether vacant land, house, or condominium;
  • Necessary wearing apparel, bible, school books, and family pictures of the Debtor and dependents;
  • Up to $4,000 in other property;
  • Up to $2,400 in a motor vehicle;
  • Up to $1,500 in tools of the trade;
  • Insurance policies on the life of the Debtor and any equity therein;
  • Health aids;
  • Rights to receive social security, veterans’, disability, illness, or unemployment benefits;
  • Rights to receive alimony to the extent necessary for support of the Debtor and dependents;
  • Rights to receive crime victim reparations, but only within 2 years of the accrual of rights;
  • Payments on account of the wrongful death of one upon whom the Debtor was dependent to the extent necessary for the support of the Debtor and dependents, but only within two years of the payment;
  • Up to $15,000 for personal injury, but only within 2 years of the payment.

In Illinois, exempt property that is purchased with non-exempt property with the intent to defraud creditors is not exempt. Property purchased within 6 months prior to the bankruptcy filing is presumed to have been purchased with such a fraudulent intent.