The Illinois Homestead Exemption

If you file for bankruptcy in Illinois, the homestead exemption allows a filer to protect up to $15,000 of home equity.

By , Attorney · University of the Pacific McGeorge School of Law

Before filing for bankruptcy, you want to know whether you can keep valuable property, especially your home. If you qualify to use the Illinois homestead exemption, you can protect some equity in your house. This article explains the amount of the Illinois homestead exemption and how to apply it in your bankruptcy case. For more information, read Filing for Bankruptcy in Illinois.

The Illinois Homestead Exemption Amount

Under the Illinois exemption system, homeowners can exempt up to $15,000 of equity in a home or other property covered by the homestead exemption.

For example, let's say your house is worth $100,000. You have a $90,000 mortgage on the property, leaving $10,000 of home equity. Your equity will be fully exempt using the Illinois homestead exemption if you file for bankruptcy. Your creditors won't be able to touch your equity, and you will keep your home (as long as you can continue making mortgage payments and paying taxes).

Using the Illinois Homestead Exemption

The homestead exemption applies to real and personal property you use as a residence, including your home, condominium, mobile home, or co-op. The homestead exemption also applies to sale proceeds from the sale of any real or personal property for up to one year from the date you sell the property.

In Illinois, the homestead exemption is automatic. You don't have to file a homestead declaration to claim the homestead exemption in bankruptcy. However, to protect your home, you must also know how real estate is treated in Chapters 7 and 13. Consider reading Your Home in Chapter 7 and Your Home in Chapter 13.

Doubling for Married Couples

In Illinois, married couples filing a joint bankruptcy can double the homestead exemption amount and protect up to $30,000 of home equity. Both spouses must have an ownership interest in the property to double the amount.

You can learn about the advantages and disadvantages of joint bankruptcy filings in Filing Considerations for Married Couples.

Real Property Held as Tenancy in the Entirety in Illinois

A tenancy by the entirety is often called a "super exemption," although it's not an exemption. If you and your spouse hold your home as a tenancy in the entirety and only one spouse files for bankruptcy, you could have greater protection against creditors because, in that situation, creditors are usually unable to take it to pay debts.

However, there are limits to the protection. For instance, a tenancy by the entirety won't protect the residence against some tax debts. Because this is one of the trickier protections, you'll want to consult a lawyer about your situation.

Finding the Illinois Homestead Exemption Statute

Illinois's homestead exemption is in the Illinois state statutes at 735 Ill. Comp. Stat. 5/12-901 and 5/12-902 on the Illinois General Assembly website. (You can learn how to find state statutes in Laws and Legal Research.)

The statute portion of the Illinois General Assembly website might not post the most current exemption amounts. If a session of the General Assembly has ended and the amounts were updated, the current amounts will be posted in the General Assembly Public Acts area.

Need More Bankruptcy Help?

Did you know Nolo has made the law easy for over 50 years? It's true, and we want to ensure you find what you need. Below you'll find more articles explaining how bankruptcy works. And don't forget that our bankruptcy homepage is the best place to start if you have other questions.

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We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.

Updated September 20, 2023

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