Updated: April 12, 2019
In bankruptcy, a homestead exemption protects equity in your home. Here you’ll find specific information about the homestead exemption in Illinois.
For information about how the homestead exemption works in both Chapter 7 and Chapter 13 bankruptcy, see The Homestead Exemption in Bankruptcy. For more articles on exemptions, see Bankruptcy Exemptions.
Under the Illinois exemption system, a homeowner can exempt up to $15,000 of equity in a home or other property covered by the homestead exemption.
The Illinois homestead exemption requires that you be a legal owner of record to claim the exemption. Your name must be listed on the deed to the property.
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.
In Illinois, the homestead exemption applies to real and personal property that you use as a residence, including your home, condominium, mobile home, and 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.
Some states allow bankruptcy filers to use the federal bankruptcy exemptions instead of the state exemptions. Illinois isn't one of those states. If you reside in Illinois, you must use the state exemptions.
Learn more about the state exemptions that apply to you in Bankruptcy Exemptions: An Overview.
In Illinois, the homestead exemption is automatic. You don’t have to file a homestead declaration in order to claim the homestead exemption in bankruptcy.
If your property is held as a tenancy in the entirety, the property is jointly owned by a married couple as a single marital entity, not as individuals. Illinois permits tenancies by the entirety, and this might allow debtors to file for bankruptcy and protect more than the homestead exemption amount.
If property is held as a tenancy in the entirety, it is owned as a whole by both married persons and creditors cannot take it to pay the debts of only one owner. For this reason, a tenancy by the entirety is often referred to as a "super exemption," although it is not actually an exemption.
There are limits to the protection provided by a tenancy in the entirety, however. If the bankruptcy filer has tax debts, or if both spouses are liable for a debt (for example, joint credit card debt or medical debt incurred during the course of the marriage), a tenancy by the entirety will not provide protection in excess of the Illinois homestead exemption.
This exemption is one of the trickier bankruptcy exemptions, so it would be wise to consult with a local bankruptcy attorney.
The Illinois statutes have a special provision that allows a surviving spouse to protect the equity in a homestead if the owner dies, for as long as the surviving spouse continues to reside in the homestead.
Similarly, if a homeowner passes and has children under the age of 18 years, the children can protect the equity in the home until age 18.
If a homestead is left to a surviving spouse and that person moves out and deserts the homestead, leaving at least one other person living in the home, the remaining person can continue to protect the home as long as he or she lives there.
Illinois’s homestead exemption is found in the Illinois state statutes at 735 Ill. Comp. Stat. 5/12-901 and 5/12-902. You can learn how to find state statutes in Laws and Legal Research.
You can find the Illinois homestead exemption on the Illinois General Assembly website.
The statute portion of the Illinois General Assembly website may 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 on the Public Acts portion of the General Assembly website.