Illinois Homestead Exemption
Almost every state provides protection for equity in the family home, and many states have increased the amount of protection in recent years. Seven states offer unlimited protection. Most states are not as generous.
New Federal Residency Requirement
Under the new bankruptcy law, you must be have lived in the state for at least 40 months (three years and four months) before you can claim any homestead protection greater than $160,375. (If your state's exemption offers less than this amount, the law is irrelevant to you.) The law is poorly worded but seems to say that if you move from one home to another in the same state, you can claim that state's homestead protection.
- IL Exemptions
- Real or personal property including a farm, lot, & buildings, condo, co-op, or mobile home to $15,000 (husband and wife may double); sale proceeds exempt for 1 year
735 Ill. Comp. Stat. 5/12-901
735 Ill. Comp. Stat. 5/12-906
- Spouse or child of deceased owner may claim homestead exemption
735 Ill. Comp. Stat. 5/12-902
Home Valuation tool
Just add your street address to get an estimate of the value of your house, and all others in your neighborhood. (Note: Does not serve all areas, and valuations are imperfect estimates only.)
Tenancy by Entirety Exemption
Tenancy by the Entirety (TBE) is a form of property ownership, based on traditional English common law, that is still recognized in about 1/2 of states and the most common form of martial property ownership in many of them.
It protects property that is jointly owned by a married couple as an "entirety" -- which is to say, as a single marital entity, not as individuals.
Tenancy by the Entirety (TBE) was originally conceived as a debt shield -- a way of protecting wives and children from being left homeless and penniless as a result of the debts of a husband. Under the English common law TBE doctrine, a husband could not sell property owned by "the entirety", or give it away, or pledge it as security for a loan without the consent of his wife.
Today, 25 states still recognize some form of tenancy by the entirety, but they differ on the extent to which the property is exempt.
Special notes about Illinois Tenancy by the Entirety Exemptions: By statute, enacted in 1991, Illinois recognizes TBE ownership in real estate. That same law makes clear that neither spouse has a separate divisible interest in TBE property, and such property is exempt from claims of creditors for either spouse.
Neighboring Missouri also recognizes TBE in personal property, including bank accounts.
Special notes about Illinois Tenancy by the Entirety Exemptions: Illinois courts have ruled that TBE protection protects against debts owed by each spouse individually, even if a married couple files jointly. Not all states follow this rule.
- Tenancy by entirety property exempt except against joint debts
750 Ill. Comp. Stat. 65/22
765 Ill. Comp. Stat. 1005/1c(title must explictly say TBE.)
Gillissie v Gillissie, 215 B.R. 370 (Bankr.N.D.Ill 1997)
Illinois Insurance exemptions
Virtually all states protect life insurance proceeds in some manner or another. Some restrict it to proceeds paid to a dependent. Many states also protect the cash-value or loan-value of insurance policies.
If a substantial amount of your assets are in life insurance, you may want to consult a professional to determine the extent to which those policies are exempt.
Special notes about Illinois Insurance Exemptions: Illinois has an odd situation of two life insurance exemptions that seem to cover the same thing. 735-5/12-1001(f) and (h)(3). Subsection (f) is unlimited, subsection (h)(3) has a limit of "reasonably necessary for support". In the case of In re Ashley, 317 B.R. 352 (Bankr. C.D. Ill, 2004) the court attempted to untangle this mystery, eventually concluding that (f) will apply when proceeds have not been paid out, or if paid, have not been converted into other property, whereas (h)(3) applies in cases where the proceeds have already been converetd onto other property before the beneficiary files for bankruptcy. Finally, while section 735-5/12-1001(f) and (h)(3) protects the beneficiary against creditors of the beneficiary, 215-5/238 protects the insured against creditors of the insured.
- Fraternal benefit society benefits
215 Ill. Comp. Stat. 5/299.1a
- Health or disability benefits
735 Ill. Comp. Stat. 5/12-1001 (g)(3)
- Homeowners' proceeds if home destroyed, to $15,000
735 Ill. Comp. Stat. 5/12-907
- Life insurance proceeds to a spouse or dependent of debtor to extent needed for support
735 Ill. Comp. Stat. 5/12-1001 (h)(3)
In re Dry, 348 B.R. 475 (Bkrtcy.C.D.Ill 2006)(proceeds from boyfreind's insurance policy exempt;dependent beneficiary need not be related)
In re Shethi, 389 B.R. 588 (Bankr.N.D.Ill. 2008)
- Life insurance, annuity proceeds, or cash value if beneficiary is insured's child, parent, spouse, or other dependent; or a trust for their benefit.
215 Ill. Comp. Stat. 5/238
735 Ill. Comp. Stat. 5/12-1001 (f)
In re Stilwell, 321 B.R. 471 (C.D.Ill. 2005)
In re Ashley, 317 B.R. 352 (Bankr.C.D.Ill. 2004)
Miscellaneous other exemptions for Illinois
- Alimony, child support
735 Ill. Comp. Stat. 5/12-1001 (g)(4)
Illinois Pensions & Retirement Savings Exemptions
The new federal bankruptcy law now automatically exempts a virtually all tax-exempt pensions and retirement savings accounts from bankruptcy, even if you are using state law exemptions. 11 U.S.C. § 522(b)(3)(C). (See Help Topic: Special Rules For Retirement Accounts.)
The law protects up to $1,283,025 of any pension or retirement fund that qualifies forspecial tax treatment under Internal Revenue Code sections 401,402, 403, 408, 408A, 414, 457, or 501(a).
- All tax-exempt retirement plans including IRAs, government and church plans
735 Ill. Comp. Stat. 5/12-1006
- Civil service employees
40 Ill. Comp. Stat. 5/11-223
- County employees
40 Ill. Comp. Stat. 5/9-228
- Disabled firefighters; widows, & children of firefighters
40 Ill. Comp. Stat. 5/22-230
40 Ill. Comp. Stat. 5/4-135
40 Ill. Comp. Stat. 5/6-213
- General assembly members 40-5/2-154
40 Ill. Comp. Stat. 5/2-154
- House of correction employees
40 Ill. Comp. Stat. 5/19-117
- Judges 40-5/18-161
40 Ill. Comp. Stat. 5/18-161
- Municipal employees
40 Ill. Comp. Stat. 5/7-217 (a)
40 Ill. Comp. Stat. 5/8-244
- Park employees
40 Ill. Comp. Stat. 5/12-190
- Police officers
40 Ill. Comp. Stat. 5/3-144.1
40 Ill. Comp. Stat. 5/5-218
- Public employees
735 Ill. Comp. Stat. 5/12-1006
- Public library employees
40 Ill. Comp. Stat. 5/19-218
- Sanitation district employees
40 Ill. Comp. Stat. 5/13-805
- State employees
40 Ill. Comp. Stat. 5/14-147
- State university employees
40 Ill. Comp. Stat. 5/15-185
40 Ill. Comp. Stat. 5/16-190
40 Ill. Comp. Stat. 5/17-151
Illinois Personal Property Exemptions
This category covers your car, your non-retirement bank accounts, and most of your other personal possessions, other than your house.
States vary widely on how generous they are in this area. Some exemptions may be for any combination of property up to an aggregate amount. Other exemptions apply only to specific items, such as jewelry.
Remember that an exemption will not protect your car from being repossessed by the holder of the car loan you used to purchase the vehicle if you pledged the vehicle as security for the loan. To keep the car, you will have to pursue other options such as 'redemption' or 'reaffirmation.' See the help topics and How to File for Chapter 7 Bankruptcy for more on this.
- Bible, family pictures, schoolbooks, & clothing
735 Ill. Comp. Stat. 5/12-1001 (a)
- Health aids
735 Ill. Comp. Stat. 5/12-1001 (e)
- Illinois College Savings Pool accounts, invested more than 1 year before filing if below federal gift tax limit, or 2 years if more than federal gift tax limit
735 Ill. Comp. Stat. 5/12-1001 (j)
- Motor vehicle to $2,400
735 Ill. Comp. Stat. 5/12-1001 (c)
- Personal injury recoveries to $15,000
735 Ill. Comp. Stat. 5/12-1001 (h)(4)
- Pre-need cemetery sales funds, care funds, and trust funds
235 Ill. Comp. Stat. 5/6-1
760 Ill. Comp. Stat. 100/4
815 Ill. Comp. Stat. 390/16
- Prepaid tuition trust fund
110 Ill. Comp. Stat. 979/45 (g)
- Proceeds of sold exempt property
735 Ill. Comp. Stat. 5/12-1001
- Wrongful death recoveries
735 Ill. Comp. Stat. 5/12-1001 (h)(2)
Auto Valuation Tools:
Both of these websites offer interactive tools to determine the current value of your used car.
Illinois Public Benefits Exemptions
Most states exempt public benefits, consistent with the notion that such benefits are intended as a safety net for the recipient.
- Aid to aged, blind, disabled; public assistance
305 Ill. Comp. Stat. 5/11-3
735 Ill. Comp. Stat. 5/12-1001 (g)(1)
- Crime victims' compensation
735 Ill. Comp. Stat. 5/12-1001 (h)(1)
- Earned income tax credit exempt as 'public assistance'
735 Ill. Comp. Stat. 5/12-1001 (g)(1)
In re Fish, 224 B.R. 82 (Bankr. S.D. Ill 1998) (earned income tax credit is a 'public benefit')
In re Vazquez, No. 13-32174 (Bankr. N.D. Ill 2014) (child tax credit is exempt as a "public benefit")
in re Frueh, No. 14–B–81029 (Bankr.W.D.Ill 2014) (Section 12–1001(g) applies only to rights to receive future payments and does not apply to funds already received prepetition or to proceeds thereof)
- Restitution payments on account of WWII relocation of Aleuts and Japanese Americans
735 Ill. Comp. Stat. 5/12-1001 (12)(h)(5)
- Social Security
735 Ill. Comp. Stat. 5/12-1001 (g)(1)
- Unemployment compensation
735 Ill. Comp. Stat. 5/12-1001 (g)(1),(3)
- Veterans' benefits
735 Ill. Comp. Stat. 5/12-1001 (g)(2)
- Workers' compensation
820 Ill. Comp. Stat. 305/21
- Workers' occupational disease compensation
820 Ill. Comp. Stat. 310/21
Illinois Tools of Trade Exemptions
These are the things you use to make a living. An automobile or truck can be a tool of trade if you use it as such. Commuting to work doesn't count, but if driving is a necessary component of transacting your business, you can claim your vehicle is a tool of trade.
- Implements, books, & tools of trade to $1,500
735 Ill. Comp. Stat. 5/12-1001 (d)
Illinois Wage Garnishment Laws
Most states have a wage garnishment law. In some states, wage garnishment laws can be used in bankruptcy as an exemption to protect income that you had coming due, but not yet received, as of the day you filed, for work you had already done -- so called "earned but unpaid wages".
In some states, the wage garnishment law protects not only wages owed to you, but also wages already in your possession and saved over time preferably holding it in a separate bank account. In other states wage garnishment laws do not protect wages once they are they are in your possession.
Special notes about Illinois Wage Garnishment Exemptions: Although one court has held that the Illinois Wage Deduction Act creates a bankruptcy exemption, In re Mayer, 288 B.R. 869 (Bankr.N.D.Ill.2008) (Wedoff, J.), most other courts within Illinois to address the issue have found that it does not. In re Radzilowsky, 448 B.R 767 (Bankr.N.D.Ill. May 6, 2011) (Doyle, J.); In re Kapusta, 2011 WL 2173675 (CD. Ill. June 2, 2011); In re Koeneman, 410 B.R. 820 (CD.Ill.2009); In re Thum, 329 B.R. 848 (Bankr.CD.Ill.2005).
- Minimum 85% of earned but unpaid weekly wages or 45 times the federal minimum hourly wage; bankruptcy judge may authorize more for low-income debtors. NOTE This exemption may no longer be allowed by all Illinois courts. See In re Radzilowski, 448 BR 767.
740 Ill. Comp. Stat. 170/4
735 Ill. Comp. Stat. 5/12-803
In re Mayer, 388 BR 869 (Bankr.ND Ill 2008)
But see, In re Koeneman, 410 B.R. 820 (Bankr.N.D.Ill 2009)
But see, In re Radzilowsky, 448 BR 767 (Bankr. N.D. Ill 2011)
Illinois Wild Card Exemption
Most, but not all, states allow a so-called "wild-card" exemption that can apply to any property. The wild card exemption can be of particular help if one or more of your other exemptions falls short of protecting your equity. You may split your wild card exemption amount over multiple items and stack it atop other exemptions as needed to protect exposed equity.
- $4,000 of any personal property (does not include wages)
735 Ill. Comp. Stat. 5/12-1001 (b)