Declaring bankruptcy does not mean a person needs to surrender all of his or her assets or possessions to satisfy debts. Under Illinois and federal law, there are numerous exemptions that help give individuals the opportunity to make a fresh start following the conclusion of bankruptcy proceedings. While Illinois is an “opt out” state, there are circumstances where individuals may claim federal bankruptcy exemptions and these should be discussed with a bankruptcy lawyer.
Benefits including Social Security, Veteran’s benefits, and pensions for Military members, and Civil Service employees are federal nonbankruptcy exemptions. Exemptions also include survivor’s benefits for family members of the military, judges, and lighthouse workers. Death and disability benefits for government employees, longshoremen, and harbor workers are exempted, as are military savings accounts, Indian land, homestead sales, and unemployment for railroad workers. There are also many other benefits that are exempted and it’s important to work with bankruptcy lawyers to determine which benefits apply to the individual’s status prior to filing.
Chapter 7 Bankruptcy Exemptions
Under Chapter 7, Individuals in Illinois may shield up to $15,000 in equity within their primary place of residence. This is doubled to $30,000 for married couples who file jointly. Individuals do not have this option on rental or vacation property. Individuals may also shield $2,400 of equity within a primary vehicle. Also exempted are health aids, books, wrongful death settlements, and proceeds from the sale of the exempt property. Further, Savings Pool accounts may also be exempt from bankruptcy if they meet the state specified guidelines.
Up to 85% of wages that are earned but unpaid and income that is 45 times greater than the minimum hourly wage are also exempt. In some cases, the judge may allow for a greater exemption based on the individual’s typical income. For example, those who qualify as being low-income may be allowed greater exemptions. The state also exempts alimony, child support, tools of the trade up to $1,500, and personal property of up to $4,000.
Failing to properly disclose and fully account for assets can have serious consequences.
Paying for Non-Exempt Property
Individuals in Illinois may also keep the nonexempt property, however, the value of the property must be paid to the trustee. The value of a property is determined at its retail replacement value. Bankruptcy lawyers in Illinois can help complete the appraisals so that they meet state and federal guidelines regarding the appropriate valuation.