Bankruptcy is a creature of federal law, so the process to file for Chapter 7 bankruptcy or to file for Chapter 13 bankruptcy is nearly identical in every state, including Illinois. However, Illinois state laws play an important role, especially in setting property exemptions, which determine what property you get to keep (if you file for Chapter 7) and how much you have to repay your creditors (if you file for Chapter 13). There are also important resources available to you by state.
Illinois Credit Counseling
Before you file for Chapter 7 or Chapter 13 bankruptcy in Illinois, you will have to complete mandatory credit counseling with an agency approved by the United States Trustee’s Office. Here’s a list of Illinois agencies that have been approved to provide this counseling.
Where to File for Bankruptcy in Illinois
Illinois has three bankruptcy districts. You can find local rules, forms, and more at the district bankruptcy court websites.
- The Northern District (includes Chicago)
- The Central District (includes Springfield and Peoria)
- The Southern District (includes East St. Louis)
Illinois Property Exemptions
Like every other state, Illinois has a set of property exemptions. (To learn more about how property exemptions work generally and which exemptions you may use, see Bankruptcy Exemptions: What Do I Keep When I File for Bankruptcy?)
Some states let bankruptcy filers choose between the state’s list of exemptions and a list of federal exemptions, but Illinois isn’t among them.
Filers in Illinois may exempt up to $15,000 in home equity and $2,400 of equity in a vehicle. Illinois also has a wildcard exemption of $4,000, which filers may apply to any property they wish. Here’s a list of Illinois exemptions.
The Means Test
When you file for bankruptcy, you must compare your income to the median income for a household of your size in Illinois. If your income is less than the median, you will be eligible to file for Chapter 7 and, if you choose to file for Chapter 13, you can use a three-year repayment plan (rather than five years).
Currently, the median income in Illinois for a two-person household is just under $58,000. These figures change periodically; these figures change periodically. You can find the most recent amounts on the website of the U.S. Trustee at www.justice.gov/ust. Click on “Bankruptcy Reform,” and then “Means Testing Information.” Or go directly to the Census Bureau table here.
Illinois Debtor Education
After you file for bankruptcy but before you receive your discharge, you must take a debtor education course. Like the mandatory credit counseling you must take before filing your forms, you must receive debtor education from an agency approved by the U.S. Trustee’s Office. Here is a list of agencies that are approved to provide this counseling in Illinois.
Finding a Bankruptcy Lawyer
If you're considering bankruptcy, you may want to talk to an experienced Illinois bankruptcy lawyer.