If you are considering filing for discharge of debts in bankruptcy, you may wonder how much of your property you will be able to keep. The answer is quite a bit. Under the bankruptcy law, you have the same property exemption that you would have if a creditor took a judgment against you. For guidance in this matter, you are urged to consult a
Why property exemptions?
A fundamental right of a creditor taking a judgment against a debtor is execution on the debtor's property. When execution occurs, the court directs the sheriff to seize the debtor's property and sell it at an auction. The auction proceeds go to the creditor.
Execution, if unlimited, could leave a debtor on the street without clothes or furniture. As a result, every state has enacted a list of exemptions of property the sheriff may not take. The bankruptcy code borrows each state's exemptions to determine what a debtor may keep.
In Illinois, you may keep the following when filing for bankruptcy:
- Homestead: up to $15,000 in equity of your home.
- Vehicle: up to $2,400 in value.
- Personal Property: clothes, family pictures, bible, school books, health aids
- Retirement: pensions, social security benefits, veteran's benefits
- Life Insurance
- Partnership interests
- Personal injury awards: up to $15,000
- Tools of trade: tools and books up to $1,500.
- Wages: 85% of one's weekly wages or 45 times the minimum wage whichever is higher. All unearned wages are exempt.
- Wildcard: up to $4,000 in personal property not including wages.
At Bizar & Doyle we are available to counsel with specific questions about property exemptions. We are skilled in helping clients with bankruptcy planning. Our goal is that all of client's assets fit within one of the bankruptcy exemptions. For example, a $15,000 vehicle is vulnerable to being taken by the bankruptcy trustee to pay debts. As a planning action, the debtor could sell the car and invest the proceeds in exempt assets such a $2,400 car and life insurance.
Contact a Bankruptcy Attorney
at the firm for guidance with bankruptcy exemptions.
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