Property You Can Keep through a Chapter 7 Bankruptcy
Under Illinois law, each individual who files for Chapter 7 bankruptcy is entitled to keep certain property considered "exempt."
For some types of property - such as family photos, health aids, worker's compensation benefits, retirement plans, IRAs, and life insurance - the value and amount that an individual can claim as exempt is unlimited. In other cases, the equity an individual can claim as exempt is limited by a fixed dollar amount.
Common examples of such dollar amount limitations for an individual are:
- Your personal residence (equity of $15,000)
- Personal injury cases ($15,000)
- Motor vehicle (equity of $2,400 for each individual owner)
- Tools or books used in your occupation (equity of $1,500)
In addition, Illinois law gives each individual the right to exempt $4,000 in equity in any other personal property, including cash or money in the bank. If a husband and a wife file a joint bankruptcy petition, each spouse is entitled to claim these exemptions.
A discharge in Chapter 7 will not affect some debts such as alimony, child support, certain taxes, fines, certain debts arising from education loans and debts which the debtor failed to disclose to the bankruptcy court.
A specific creditor may request that the Bankruptcy Court exclude its debt from the debtor's discharge debts based a loan being approved due to a false financial statement or arising from fraud, embezzlement, drunk driving, or certain other willful or malicious acts. If the bankruptcy judge rules in the creditor's favor, the debt to that creditor will not be discharged in a bankruptcy.
Note: This information was prepared as a public service by the Illinois State Bar Association. Every effort has been made to provide accurate information at the time of publication. For the most current information, please consult your lawyer. If you need a lawyer and do not have one, visit our lawyer referral page.
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