Consumers may be able to retain their homestead and vehicle when filing for bankruptcy in Illinois, but specific conditions apply. Whether a certain property is exempted depends on the value of the property and the exemptions that are available.

Homestead Exemption

The real property exemption allows $15,000 of home equity for each bankruptcy filer. For example, if a person’s home is worth $100,000 and he still owes $90,000, there is $10,000 of equity in the property. The equity in this example would be exempt and free from creditor claims. If a couple is filing bankruptcy together, the exemption is $30,000. If one spouse dies or deserts the family, the exemption limit will still remain in place if the other spouse continues to reside in the home.

Illinois also recognizes a special form of property ownership called tenancy by the entirety. This is a specific type of ownership only available to married couples. When property is held as tenancy by the entirety, protection in excess of the homestead exemption may be available.

Motor Vehicle Exemption

Equity in a motor vehicle up to $2,400 is also exempted under Illinois bankruptcy law. If there is a loan that secures the vehicle and there is $2,400 or less in the difference between the loan and the value of the vehicle, the vehicle cannot be taken. Likewise, if the vehicle is worth less than $2,400, the vehicle can be exempted. Additionally, Illinois has a “wild card” exemption of an additional $4,000 that a bankruptcy filer can assert for a car or any other property. If a claimant’s vehicle is worth $6,000, the bankruptcy filer can stack the motor vehicle exemption and the wild card exemption to keep the vehicle.


Even if the home and the vehicle can be exempted, details about them any associated debt must be disclosed in the bankruptcy filing. Creditors must be made aware of these assets and their values.


Even if a person is legally able to keep a home or vehicle, it may not be in his or her best interest to do so. For example, if the claimant is behind on payments or will not be able to maintain payments, it may be easier to walk away from the property. Bankruptcy lawyers can review assets and current obligations to determine what may be in the client’s best interests.