In Illinois, the exemptions are provided for by state law. Perhaps the most important exemption is the homestead exemption. If you decide to claim bankruptcy with a Schaumburg bankruptcy attorney, keep in mind the statute under 735 ILCS 5/12-901, a single debtor is allowed to exempt $15,000 in home equity. For married debtors, that number doubles to $30,000. Most of the remaining exemptions are found under 735 ILCS 5/12-1001. The common exemptions include the motor vehicle exemption, valued at $2,400 per individual under 5/12-1001(c); the “trade tools” exemption at $1,500 per person under 5/12-1001(b), and the exemption for clothes and other necessary wearing apparel under 5/12-1001(a). Personal injury awards are exempt up to $15,000 per individual. Some assets are exempt completely. These include retirement accounts qualified under ERISA, workers’ compensation benefits, and life insurance policies with dependents as beneficiaries.
The most useful exemption and part of the bankruptcy basics is the wildcard exemption, under 12-1001(b). The wildcard exemption can be split up and divided to protect any personal property whatsoever. The wildcard exemption can be used in conjunction with other exemptions to fully protect assets. Most debtors have minimal personal assets, and as a practical matter, most debtors will have no un-exempt assets.
Un-exempt Property: The most common un-exempt property are homes with substantial equity, investment properties, joint bank accounts with family or friends, and stocks or bonds held outside of retirement accounts. For self-employed debtors or debtors engaged in business, accounts receivable and business assets are typically un-exempt. Business equipment can be a particular issue for blue-collar self-employed debtors, such as landscapers or owner-operator truck drivers, as those professions require valuable equipment to do business.
Dealing With Un-Exempt Property: If there is un-exempt property, there are steps that can be taken to protect it. One option that exists is that a debtor can buy out the trustee’s interest in the assets. Debtors can also simply let the trustee sell the property in exchange for the bankruptcy discharge. While it may be bitter, selling off an asset in exchange for a discharge can be a great bargain for debtors. Another of the bankruptcy options would be to file a Chapter 13 bankruptcy and use the payment plan structure to pay the creditors the equivalent value of the assets to protect those assets. Chapter 13 is very complicated, and will be dealt with in greater detail in a later section.