Illinois Bankruptcy Exemptions

Learn what property you can protect in bankruptcy under Illinois bankruptcy exemption laws.

April 10, 2017

If you file for Chapter 7 bankruptcy in Illinois, you can protect some or all of your property with Illinois’ bankruptcy exemptions. The bankruptcy exemptions in Illinois also play a role in determining the amount of your monthly payment in a Chapter 13 bankruptcy. Read on to learn about the property covered by Illinois’ bankruptcy exemptions.

For a general overview, see Bankruptcy Exemptions topic page.

Debtors Must Use Illinois Exemptions

Illinois has enacted legislation “opting out” of the federal bankruptcy exemptions. As a result, Illinois bankruptcy filers are only permitted to exempt property using state laws (with the exception of the federal nonbankruptcy exemptions).

Married Couples Can Double Illinois Exemptions

Married couples filing a joint bankruptcy in Illinois can “double” the exemption amount. The effect of this rule is that each spouse can claim the full exemption amount for any property owned by that spouse.

Common Illinois Exemptions

Here are some common exemptions available under Illinois law:

Alimony, Support, and Maintenance

You can exempt the amount reasonably necessary for support. 735 ILCS 5/12-1001(g)(4).

Cemeteries and Burial Funds

You may exempt all pre-need cemetery sales and future care funds. 225 ILCS 45/4a; 760 ILCS 100/4; 815 ILCS 390/16.

Claims for Negligence or Tortious Conduct

You can exempt a payment made to you on account of the wrongful death of a person who was your dependent to the extent reasonably necessary for your support. Further, you can deduct a personal injury award up to $15,000. 735 ILCS 5/12-1001(h)(2),(4).

Crime Victim’s Compensation

You may exempt 100% of any award given as compensation for a crime. 735 ILCS 5/12-1001(h)(1),(i); 740 ILCS 45/18.

Franchise, Permit, and License Interests

You may exempt your liquor permit. 235 ILCS 5/6-1.

Fraternal Benefit Society Benefits

All fraternal benefit society benefits are 100% exempt. 235 ILCS 5/299.1a.

Homestead or Residential Property

The homestead exemption protects a certain amount of equity in your home or principal residence. You are allowed to exempt up to $15,000 in a residence, which includes a farm, mobile home, lot with buildings, condominium, and cooperative. This exemption also includes proceeds from the sale of a homestead for one year. 735 ILCS 5/12-901, 902, 906.

You might also be able to protect more equity if you hold your residence as tenants by the entirety. 750 ILCS 65-22. For more details about how the homestead exemption works in Illinois, see The Illinois Homestead Exemption.

Insurance Benefits

Life insurance, annuity proceeds, or cash value if the beneficiary is insured's child, parent, spouse, or another dependent. 215-5/238; 735-5/12-1001(f).

Life insurance proceeds to a spouse or dependent of a filer to the extent needed for support. 735-5/12-1001(f),(h)(3).

Health or disability benefits. 735 ILCS 5/12-1001(g)(3).

Motor Vehicles

You may exempt up to $2,400 in one motor vehicle. 735 ILCS 5/12-1001(c).

To learn more about the Illinois Motor Vehicle exemption, visit The Illinois Motor Vehicle Exemption in Bankruptcy.

Partnership Property

Illinois has enacted the Uniform Partnership Act, which exempts a partner’s interest in specific property. 805 ILCS 205/25.

Pension and Retirement Benefits

Pensions for various types of employees. 40 ILCS 5/7-217; 735 ILCS 5/12-704; 735 ILCS. 5/12-1006.

Tax exempt retirement accounts (such as 401ks and IRAs) are exempt as per the federal rules. For current amounts, see Your Retirement Plan in Bankruptcy.

Personal Property

You can exempt the following personal property:

  • Necessary wearing apparel.
  • Bible and school books.
  • Family pictures.
  • Professionally prescribed health aids.
  • A certificate of title to any a watercraft over 12 feet in length.
  • Prepaid tuition trust fund
  • Illinois College Savings Pool accounts invested more than 1 year before filing if below federal gift tax limit, or 2 years before filing if above.

625 ILCS 45/3A-7; 735 ILCS 5/12-1001.

Public Assistance

All public assistance is 100% exempt (this includes the earned income tax credit and child tax credit, but only if you have not yet received the funds). 305 ILCS 5/11-3; 735 ILCS 5/12-1001. (Inn re Fish, 224 B.R. 82 (Bankr. S.D. Ill 1998); In re Vasquez, No. 13-32174 (Bankr. N.D. Ill 2014).

Trade Implements

You may exempt $1,500 in all tools of your trade, including professional books. 735 ILCS 5/12-1001. National Guard uniforms and guns are also exempt. 20 ILCS 1805/10.

Unemployment Compensation

You may exempt 100% of all unemployment compensation except for certain child support claims. 735 ILCS 5/12-1001; 820 ILCS 405/1300.

Wages

You may exempt the following amount of your wages:

  • 85% of your gross earnings; or
  • 45 times the federal minimum hourly wage per week (whichever is greater).

735 ILCS 5/12-803; 740 ILCS 170/4.

Wildcard

$4,000 of any personal property (does not include wages). 735 ILCS 5/12-1001(b).

Worker’s Compensation

All workers compensation is 100% exempt. This includes claims and awards for occupational diseases. 820 ILCS 305/21.

Veteran’s Benefits

All veteran’s benefits are 100% exempt. 735 5/12-1001(g)(2).

Confirming the Status of Illinois Bankruptcy Exemptions

Illinois’s exemption amounts are adjusted periodically. To make sure you have the most recent figures, be sure to check for any updates at the Illinois General Assembly.

For additional information on how to research and find the latest exemption amounts, see our Legal Research Center.

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