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Understanding Illinois Bankruptcy Exemptions

Posted on in Bankruptcy

Although the percentage of U.S. bankruptcy filings experienced a decline in the final quarter of 2014, Illinois remained ranked among the top five leading states with the highest per capita filing rate. The latest data is evident of a 16 percent decline, according to theAmerican Bankruptcy Institute (ABI) but for those Illinois residents still on the verge of petitioning for debt protection by filing for Chapter 7 or Chapter 13 protection, many questions may arise. It would be best to consult with an experienced Illinois bankruptcy attorney before making a financial decision but the top questions most likely explored by those experiencing financial hardship are, what assets would be relinquished and what assets would fall under bankruptcy exemptions?

Illinois, as all states, maintains its own set of exemptions under Chapter 7 or Chapter 13 bankruptcy guidelines. In addition to state specific exemptions, a potential petitioner may also opt to include approved provisions from the federal bankruptcy exemptions. Before consulting with a bankruptcy attorney, the following Illinois accepted exemptions may provide a deeper insight as to what filing for bankruptcy protection would mean to varying individuals. Under Illinois compiled statutes, the following exemptions apply.

Homestead Exemption

With regard to real or personal property, often including farms, buildings, lots, condo or co-op, mobile home up to $15,000 in value, the spouse or child of a deceased original owner can claim tenancy by the entirety of sale proceeds for up to one year.

Personal Property Exemption

Exemptions in this category include prepaid tuition trust funds, prepaid funeral arrangements and care or trust established funds.

Personal property is also defined as any motor vehicle up to $2,400 in value, clothing, health aides, academic textbooks or vested Illinois College Savings Pool accounts, family photos and bible or personal injury or wrongful death awards up to $15,000.

Employment Wage Exemption

Although the presiding judge may approve a monetary amount differing from the instituted low income debtor calculation, under this exemption either a minimum of 85 percent of earned but unpaid wages apply or 45 times the higher of the state or federal minimum hourly wage is applicable, whichever is greater.

Pension Plan Exemption

Retirement accounts such as 401(k)s, 403(b)s, and profit-sharing or money purchase plans, including SEP and SIMPLE IRAs are exempt under Illinois and federal exemption guidelines.

Public Benefits Exemption

These types of benefits may include aid to the blind, disability benefits, public assistance, Veterans' and Social Security benefits, unemployment compensation as well as crime victims' compensation or military restitution for those serving in World War II with regard to the relocation of Japanese Americans. This exemption also covers workers' compensation and occupational disease benefits.

Trade Tool Exemption

For those in a specific trade, dependent highly on associated tools to successfully function on the job, all tools, books and associated work-related items are protected up to $1,500.

Alimony and Child Support Exemption

Illinois awarded alimony and child support payments are 100 percent exempt.

Insurance Exemptions

Insurance coverage such as life, annuity or cash value coverage (if beneficiary is an immediate family member) is protected as well as Fraternal Order benefits.

Health and disability benefits or life insurance proceeds required for support of a spouse or minor child are also protection.

Homeowner's insurance proceeds resulting from a claim for destroyed property is protected up to $15,000.

Wildcard Exemption

There is one more exemption provision under Illinois bankruptcy exemptions. For items categorized under personal property, excluding wages, items may be covered up to $4,000.

Although these are the majority of exemptions cited under Illinois bankruptcy code, the skilled Arlington Heights bankruptcy lawyers of Newland & Newland, LLP offer a free phone consultation to Northern Illinois residents who may be considering debt protection under Chapter 7 or Chapter 13 bankruptcy. To learn more about our services, contact any one of our six convenient locations today to schedule your free phone consultation.

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