Illinois Bankruptcy Exemptions

You can protect property in an Illinois bankruptcy using the Illinois bankruptcy exemption laws.

February 8, 2019

You won’t lose everything when filing for bankruptcy in Illinois. You’ll be able to use Illinois’s bankruptcy exemptions to protect the things you’ll need to work and live, such as your home, personal items, and a retirement account.

Learn more in Filing Bankruptcy in Illinois.

Illinois Exemptions v. Federal Bankruptcy Exemptions

Some states allow residents to choose between the state and the federal bankruptcy exemptions, but that option isn’t available in Illinois. You’ll use Illinois’s state exemptions and, if helpful, the federal nonbankruptcy exemptions.

Common Illinois Bankruptcy Exemptions

Here are some of the more common exemptions in Illinois. When reviewing them, you’ll want to keep these things in mind:

  • Joint filing. Unless otherwise noted, when spouses file together in Illinois, each spouse can claim the full amount of the exemption (informally called “doubling”) as long as each spouse has an ownership interest in the property.
  • List and verify your exemptions. You must claim an exemption by listing it in the official bankruptcy forms. You might qualify for exemptions not included in this article, or be required to meet qualification requirements. Consulting with a local bankruptcy attorney is the best way to ensure that you’re protecting your assets.
  • Legal citations. You’ll find each of the statutes in the Illinois Compiled Statutes or the federal law.

Illinois Homestead Exemption

735-5/12-901-902; 750-65/22 - Equity in real or personal property, including farms, lots, buildings, condos, co-ops or mobile homes up to $15,000. A spouse or child of a deceased owner can claim a homestead. Sale proceeds can also be exempted, with conditions (735-5/12-906). In some instances, you might be able to protect additional equity if you hold the property in tenancy by the entirety.

Illinois Motor Vehicle Exemption

735-5/12-1001 – Equity in one motor vehicle up to $2,400.

Illinois Wildcard Exemption

735-5/12-1001(b) - Any personal property up to $4,000. You can’t use the Illinois wildcard exemption to protect real estate or wages.

Other Illinois Exemptions

Personal Property

735-5/12-1001 - Necessary clothing; health aids; school books; family pictures; bible; personal injury recoveries up to $15,000; wrongful death recoveries; proceeds from sale of exempt property; Illinois College Savings Pool accounts that were invested more than one year before filing if below federal gift tax limit, or two years before filing if above the federal gift tax limit.

Pensions

11 U.S.C. § 522; 735-5/12-1006 - Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans); IRAS and Roth IRAs to the maximum amount. (This amount is set by federal law. See Federal Bankruptcy Exemptions for updates on this dollar amount.)

40-5/2-154 - General assembly members.

40-5/3-144.1; 40-5/5-218 - Police officers.

40-5/4-135; 40-5/6-213 - Firefighters.

40-5/7-217; 40-5/8-244 - Municipal employees.

40-5/9-228 - County employees.

40-5/11-223 - Civil service employees.

40-5/12-190 - Park employees.

40-5/13-805 - Sanitation district employees.

40-5/14-147 - State employees.

50-5/15-185 - State university employees.

50-5/16-190; 40-5/17-151 Teachers.

40-5/18-161 - Judges.

40-5/19-117 - House of correction employees.

40-5/19-218 - Public library employees.

40-5/22-230 - Disabled firefighters, and widows and children of firefighters.

735-5/12-1006 - Public employees.

Public Benefits

305-5/11-3; 735-5/12-1001(g)(1) - Aid to blind, aged, and disabled; public assistance, including earned income tax credit and child tax credit (applies to future payments but not funds already received) (In re Fish, 224 B.R. 82 (Bankr. S.D. Ill 1998); In re Vazquez, No. 13-32174 (Bankr. N.D. Ill 2014); In re Frueh, No. 14–B–81029 (Bankr. W.D. Ill 2014))

735-5/12-1001 - Veterans' benefits; Social Security; unemployment compensation; crime victims' compensation; restitution payments for World War II relocation of Japanese Americans and Aleuts.

820-305-21 - Workers' compensation.

820-310/21 - Workers' occupational disease compensation.

Tools of the Trade

735-5/12-1001 - Tools, books, and implements of trade up to $1,500.

20-1805/10 - National Guard uniforms and arms.

Insurance

215-5/238 - Life insurance, annuity, or cash value if the beneficiary is spouse, child, parent, or another dependent of the beneficiary.

215-5/299.1a - Fraternal benefit society benefits.

735-5/12-1001 - Health and disability benefits; life insurance proceeds needed for support if the beneficiary is a spouse or child.

Other

805-205/25 - Specific business partnership property.

735-5/12-1001(g)(4) - Alimony and child support needed for support.

Add any applicable federal nonbankruptcy exemptions.

Nonexempt Property—Property You Can’t Protect With a Illinois Exemption

Some people can keep all assets, but that isn’t always true. Here’s what will happen to nonexempt property:

  • In a Chapter 7 bankruptcy, the bankruptcy trustee appointed to administer your case will sell nonexempt property and distribute the proceeds to creditors. Find out more about the bankruptcy process and the Chapter 7 documents you'll need at each stage.
  • In Chapter 13 bankruptcy, it works differently. You can keep everything you own, but you’ll pay creditors the value of the nonexempt property, your disposable income, or your nondischargeable debt (support obligations, most taxes, and the like), whichever is more, through your Chapter 13 repayment plan.

You’ll learn more about Chapter 7 and 13 in Which Type of Bankruptcy is Right for Me?

Confirming Illinois Exemptions

This list includes the majority of bankruptcy exemptions available in Illinois. However, doesn’t include all exemptions. Also, states often create qualification requirements for specific exemptions, and Illinois might have changed the amounts since this list was last updated. Check the Illinois Compiled Statutes or with a local bankruptcy lawyer.

To learn more about bankruptcy exemptions, the state exemption system, and the homestead exemption rules, read Bankruptcy Exemptions – What Can I Keep When I File for Bankruptcy?

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