The Illinois Motor Vehicle Exemption in Bankruptcy

The Illinois motor vehicle exemption allows you to protect $2,400 of car equity in bankruptcy.

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The Illinois motor vehicle exemption allows you to protect $2,400 in car equity if you file for bankruptcy. You can also use Illinois' wildcard to protect car equity. Here you’ll find information about the Illinois car and wildcard exemptions.

(For more information about exemptions, including how they work and which ones you can use, see our Bankruptcy Exemptions area. For information specific to the motor vehicle exemption, see our Motor Vehicle Exemption in Bankruptcy area.)

The Illinois  Motor Vehicle Exemption and Your Car

Illinois’s motor vehicle exemption plays a large role in determining whether or not the bankruptcy trustee can take your vehicle to repay your unsecured creditors.  If the equity in your car is less than Illinois’s car exemption, then the trustee cannot sell it. If the equity in your car is significantly more than the applicable exemption amount, the trustee is likely to sell your car to repay your unsecured creditors. For details, see The Motor Vehicle Exemption: Can You Keep Your Car in Chapter 7 Bankruptcy? 

Keep in mind that even if your car is safe from the bankruptcy trustee, the lender may be able to repossess your car during or after bankruptcy. To learn more, see Your Car in Chapter 7 Bankruptcy and If You Are Behind on Your Car Payments, Can Chapter 7 Help?

The Amount of Illinois’s Motor Vehicle Exemption

In Illinois, you can exempt up to $2,400 in equity in your car or other vehicle.

The Federal Motor Vehicle Exemption

Some states allow bankruptcy filers to use the federal bankruptcy exemptions instead of state exemptions, but Illinois is not one of these states.

Using Illinois’s Wildcard Exemption to Protect Your Car

If the equity in your car is more than $2,400, you may be able to cover the extra equity by using a wildcard exemption. Illinois law provides a wildcard exemption of $4,000 for any personal property (except wages). That means that if the equity in your car exceeds $2,400, you can use the unused portion of the $4,000 wildcard to cover the rest.

For example, if your car has $6,000 in equity, you can exempt $2,400 of that equity with the motor vehicle exemption, then exempt the remaining $3,600 with the wildcard exemption, as long as you did not use more than $400 of the wildcard exemption for other property.

Can Married Couples Double Illinois’s Motor Vehicle Exemption?

Some states allow married couples filing a joint bankruptcy petition to double the listed exemption amounts. In Illinois, if married debtors file a joint bankruptcy, each debtor is entitled to take $2,400 in exemptions to protect one motor vehicle. If you and your spouse jointly own one car, you can double your exemptions as to that car and exempt $4,800.  However, you cannot use your motor vehicle exemption to protect a car your spouse owns individually, and vice versa.

Learn more about joint bankruptcy options in Nolo's section on Bankruptcy Considerations for Married Couples.

What Vehicles and Insurance Are Covered by the Motor Vehicle Exemption?

The motor vehicle exemption covers one motor vehicle; you can use the wildcard exemption to cover any other property.

Checking Illinois’s Exemption Laws

You can find Illinois’s motor vehicle exemption at 735 Ill. Comp. Stat. 5/12-1001(e).

You can find the Illinois statutes on the website of the Illinois General Assembly at www.ilga.gov. To learn how to find state statutes, see Nolo’s Laws and Legal Research area.

When the Illinois Exemption Amounts Are Updated

The exemption laws in Illinois change periodically. Check the statute to make sure you are using the updated amount.

by: , Contributing Author

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