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Illinois Bankruptcy Exemptions for 2019


(Portions reprinted by permission from How to File for Chapter 7 Bankruptcy, Nolo © 1989-2019 )

Illinois Bankrupcty Exemptions Summary

(details below...)

Federal Bankruptcy Exemptions NOT Available in Illinois

Illinois has opted out of the Federal Exemptions (see below)

Homestead

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  (more...)

Auto/Truck (aka Motor Vehicle)

$2,400   (more...)

Personal Property

See Wild Card
Bible, family pictures, schoolbooks, & clothing
Health aids
Implements, books, & tools of trade to $1,500    (more...)

Wild Card

$4,000 of any personal property (does not include wages)   (more...)

Wage Garnishment Law

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. However, several recent cases have held that wages are not exempt in Illinois.   (more...)

More Illinois Exemptions...

[Click here for more info & citations...]

Disclaimer

Disclaimer

Citations and links to primary law and secondary sources are provided for those who wish to do further research. Every effort has been made to make this information up to date and accurate, but laws can and do change without notice. Persons relying on this information are responsible for confirming its timeliness and accuracy before relying on it. (This information was updated for April 2019.)

Also bear in mind that these brief summaries do not list every detail or exception to these exemptions. For example, there are often exceptions for collection of child support debt and/or taxes. These listings are designed to inform you of laws that exist for your benefit, so that you may exercise what rights you may have.

Finally, this website is intended to provide information only. It cannot answer whether your property does or does not qualify for a specific exemption.

more...  

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Illinois Homestead | Insurance | Retirement | Personal Property | Public Benefits | Tools of Trade | Wage Garnishment | Wild Card |

Illinois Bankruptcy Exemptions

Federal Bankruptcy Code Exemptions Not Available in Illinois

Although the federal bankruptcy code provides a list of exemptions, these exemptions are not available in Illinois. Illinois law requires you to use the exemptions found in state law -- not the U.S. bankruptcy code.

Federal "non-bankruptcy" exemptions are available

However you are entitled to use so-called federal "non-bankruptcy" exemptions in addition to your state law exemptions. Non-bankruptcy exemptions are those found provisions of U.S. law that are not part of the bankruptcy code.

The four most significant non-bankruptcy exemptions are for

  • Wages (a general cap on what percentage of your wages can be garnished),
  • Social Security benefits,
  • Civil Service benefits,
  • Veterans Benefits

Other so called "non-bankruptcy" exemptions mostly deal with various benefits to government and military personnel, with a few odd laws regarding specially-regulated labor markets such as railroad workers, seamen, and longshoremen.

Special Notes regarding Illinois exemptions:

See also this compilation of Illinois exemptions.

Can you double exemptions for joint filers? (General principles)

If you are married and filing together, you and your spouse must use the same law; one cannot use federal law while the other uses state law. However, the exemption law chosen applies separately to each spouse. Thus, it is generally possible to double the amount of state law exemptions, Cheeseman v. Nachman, 656 F.2d 60 (4th Cir. 1981) (married couple filing a joint petition was entitled to double the Virginia homestead exemption), unless state law (e.g. California) specifically prohibits a couple from doubling certain exemptions. See First National Bank v. Norris, 701 F.2d 902 (11th Cir. 1984)(Alabama); Granger v. Watson, 754 F.2d 1490 (9th Cir. 1985)(California).

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Illinois Homestead | Insurance | Pensions | Personal Property | Public Benefits | Tools of Trade | Wage Garnishment | Wild Card |

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Illinois Homestead Exemption

Home Valuation tools

Zillow.com Recommended! Wonderful tool that shows home values in your neighborhood. This link will take you to a listing of the average home value in your zip code. 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.)

Yahoo Real Estate offers comparable home sales in your neighborhood.

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.

IF you are moving to another state, OR you moved to Illinois within in the last two years, click here.

  • 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

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Illinois Homestead | Insurance | Pensions | Personal Property | Public Benefits | Tools of Trade | Wage Garnishment | Wild Card |


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.

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Illinois Homestead | Insurance | Pensions | Personal Property | Public Benefits | Tools of Trade | Wage Garnishment | Wild Card |


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. The website AssetProtectionBook.com does particularly thorough job of covering Illinois insurance exemptions.

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.

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Illinois Homestead | Insurance | Pensions | Personal Property | Public Benefits | Tools of Trade | Wage Garnishment | Wild Card |


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 for special tax treatment under Internal Revenue Code sections 401, 402, 403, 408, 408A, 414, 457, or 501(a).

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Illinois Homestead | Insurance | Pensions | Personal Property | Public Benefits | Tools of Trade | Wage Garnishment | Wild Card |

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Illinois Personal Property Exemptions

Auto Valuation Tools:

Kelley Blue Book

Edmunds

Both of these websites offer interactive tools to determine the current value of your used car.

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.

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Illinois Homestead | Insurance | Pensions | Personal Property | Public Benefits | Tools of Trade | Wage Garnishment | Wild Card |


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.

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Illinois Homestead | Insurance | Pensions | Personal Property | Public Benefits | Tools of Trade | Wage Garnishment | Wild Card |


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.

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Illinois Homestead | Insurance | Pensions | Personal Property | Public Benefits | Tools of Trade | Wage Garnishment | Wild Card |

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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.

There is a federal wage garnishment protection found in the CCPA (Consumer Credit Protection Act), 15 U.S.C. § 1673, which limits how much of your pay can be taken for collection purposes. But this law law is generally found not to be an exemptions in bankrupty. See, e.g. IN RE HORTON, Case No. 10-53495., Bankr. ED Kentucky, 3/4/2011

Some courts have also held that some state wage garnishment laws do not create an exemption in bankruptcy. See, eg. Utah, Tennessee, Vermont, Missouri.

Other courts have held that state garnishment statutes DO create an exemption. See, e.g., Oregon, Iowa, Ohio, Kansas, Indiana.

And in Illinois there are recent published bankruptcy court opinions going both ways on the issue of whether Illinios wage garnishment law can be used as an exemption in bankruptcy.

Click here for collected case law on the question: Do wage garnishment laws create an exemption in bankruptcy?

Finally, if you live in a state that lets you use the Federal bankruptcy exemptions in 522(d), and you choose to use them, then you get no exemption for earned but unpaid wages; the wildcard exemption is your only option. See, e.g. U.S. v. Christensen, 200 B.R. 869 (D.S.D. 1996) (applying FDCPA law, based on similar statutory structure to bankruptcy's opt-out law)

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).

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Illinois Homestead | Insurance | Pensions | Personal Property | Public Benefits | Tools of Trade | Wage Garnishment | Wild Card |


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)

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