When a debtor files for chapter 7 or chapter 13 bankruptcy, they are allowed certain protections under the bankruptcy code. Among the protections, are exemptions to exempt certain assets from becoming property of the bankruptcy estate.
Illinois has opted out of the federal exemptions, providing a list of asset protections granted by state law.
The Illinois homestead exemption law provides the bankrupt debtor protection of up to $15,000 of the equity in their residence in Illinois.
§ 735 ILCS 5/12-901. Amount
Sec. 12-901. Amount. Every individual is entitled to an estate of homestead to the extent in value of $ 15,000 of his or her interest in a farm or lot of land and buildings thereon, a condominium, or personal property, owned or rightly possessed by lease or otherwise and occupied by him or her as a residence, or in a cooperative that owns property that the individual uses as a residence. That homestead and all right in and title to that homestead is exempt from attachment, judgment, levy, or judgment sale for the payment of his or her debts or other purposes and from the laws of conveyance, descent, and legacy, except as provided in this Code or in Section 20-6 of the Probate Act of 1975 [755 ILCS 5/20-6]. This Section is not applicable between joint tenants or tenants in common but it is applicable as to any creditors of those persons. If 2 or more individuals own property that is exempt as a homestead, the value of the exemption of each individual may not exceed his or her proportionate share of $ 30,000 based upon percentage of ownership.
There ya go, if you live in your property, you get $15000 exemption for your home in Illinois, $30000 to protect the equity if you own it jointly with your spouse and you are both filing bankruptcy.
In Chicago, as well as other areas, values of homes have plummeted, and there is hardly any equity in most of my bankruptcy case filings to even worry about the exemption not covering enough.
The exemption protects any equity beyond the balance on the mortgage and also, we factor in brokers fees and commissions to sell the home too.
Give us a call to discuss equity in your Illinois home, and we’ll examine the exemption and any equity for you, free of charge! You can’t beat that!!