Personal Property Exemptions In Illinois For Chapter 7 And Chapter 13

People are always concerned that they can lose their car or furniture  when they file a Chapter 7 case. While it is a reasonable concern, the  law recognizes that one can keep more than just the shirt on his back  when going through bankruptcy.

Property exemptions determine what  property debtors may keep. Illinois has its own exemptions rather than  the federal bankruptcy exemptions. Most exemptions listed here can be  doubled for married couples. That includes same gender married couples.

The  following article discusses the most frequent Personal Property  exemptions allowed Illinois individuals who file a Chapter 7 or a  Chapter 13.

PERSONAL PROPERTY OF ANY KIND UP TO $4,000

Generally  when we think personal property we think of cash, bank accounts and  furniture. But this exemption is also a “wild card” that can be used to  supplement many other exemptions that have specific limits. It is  important to realize that used furniture generally has almost no resale  value so most of the “wild card” can be used elsewhere.

MOTOR VEHICLES

The  limit for equity in a motor vehicle is $2,400 for one vehicle. In  bankruptcy, one looks at the amount a trustee could obtain if they sell  the car, which is essentially the trade-in-value.

Cars are the one  asset that frequently has the “wild card” exemption added to the  regular car exemption. If one owns 2 cars the “wild card” must be used.  For married couples, if there are two vehicles and each is titled in  both names they get 2 exemptions.

CLOTHING AND TOOLS OF THE TRADE

Necessary wearing apparel is 100% exempt.

TOOLS OF THE TRADE

The exemption is $1,500 for work related tools, implements, and equipment.

WORKER’S COMPENSATION

Worker’s  Compensation claims are 100% exempt, including awards for occupational  diseases. However, in Chapter 13 cases, the claims get more complicated  so be sure to discuss this subject thoroughly when filing a Chapter 13.

PERSONAL INJURY CLAIMS

The  exemption for personal injury claims is $15,000 of the net amount one  would receive after attorney’s fees and medical bills. This exemption  includes the wrongful death of a person who was your dependent. Again  the “wild card” can be used to increase the exemption, up to close to  $19,000.

PENSION AND RETIREMENT AND LIFE INSURANCE BENEFITS

There  is a 100% exemption to qualified pensions and retirement benefits. That  would include Individual Retirement Accounts (IRA) and 401(k) accounts.  The amounts received because of the death of an insured person are 100%  exempt.

MISCELLANEOUS OTHER FACTORS

There  are some other enumerated exemptions but the above cover the vast  majority of individuals seeking bankruptcy protection. Some of the  remaining exemptions are for medical aids and also for Social Security  or public aid benefits.

PROPERTY IN EXCESS OF ALLOWED EXEMPTIONS

What  if a person’s personal property is over and above allowed exemptions by  $1,000 or $2,000? Even the most aggressive trustee will not attempt to  sell assets unless the trustee is able to garner at least $2,000 for the  benefit of creditors.

CHAPTER 13 AND PERSONAL PROPERTY EXEMPTIONS

It  is not the practice of Chapter 13 trustees do not sell property. The  purpose of the exemptions in Chapter 13 is to determine if general  unsecured creditors would receive a dividend in Chapter 7. If so, this  can affect the dividend to general unsecured creditors.

Assume  that after exemptions $10,000 would be paid to general unsecured  creditors in a Chapter 7. In a Chapter 13 if the total amount of debts  to general unsecured creditor is $40,000 (assuming no priority  creditors) the dividend paid to unsecured creditors in Chapter 13 would  have to be at least 25% (divide 10,000 by 40,000).

For a more in  depth analysis of exemptions and how it might affect you personally,  feel free to call us. Our advice is Complimentary and confidential.

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