There are two main types of bankruptcy exemptions in Illinois: state exemptions and federal exemptions. State exemptions are those specified by Illinois law, while federal exemptions are those specified by the U.S. Bankruptcy Code. Filers in Illinois must use the Illinois state exemptions under most circumstances.

State Exemptions in Illinois:

• Homestead Exemption: This exemption allows filers to protect the equity in their primary residence up to a certain dollar amount. In Illinois, the homestead exemption is $15,000 for individuals and $30,000 for married couples.
• Personal Property Exemption: This exemption protects personal property, such as jewelry, and household furnishings, up to a certain dollar amount. In Illinois, the personal property exemption is part of the wildcard exemption (see below) with a total exemption amount of $4,000 for individuals, or $8,000 for married joint filers.
• Tools of the Trade Exemption: This exemption protects tools, equipment, and other items that are necessary for the filer’s trade or business, up to a certain dollar amount. In Illinois, the tools of the trade exemption is $2,400.
• Retirement Account Exemption: This exemption protects retirement accounts, such as IRAs and 401(k)s, from being seized by the bankruptcy court. In Illinois, there is no specific dollar amount limit for this exemption, but there are limits on the type of account and the amount that can be protected.
• Wildcard Exemption: This exemption allows filers to protect cash and personal property (see above) for other assets of their choosing, up to a certain dollar amount. In Illinois, the wildcard exemption is $4,000 for individuals, $8,000 for joint filers.
• Clothing- Necessary wearing apparel is 100% exempt.

Federal Exemptions in Illinois:

• The federal exemptions include exemptions for items such as Social Security benefits, veterans’ benefits, and public assistance, as well as exemptions for pensions and IRAs.

It is important to note that exemptions in Illinois and the federal exemptions are subject to change, and that the specific exemptions available to a filer can depend on a variety of factors, such as the filer’s income and assets, the type of bankruptcy being filed, and the filer’s individual circumstances.

In conclusion, bankruptcy exemptions in Illinois are an important tool for filers seeking to protect their assets while they navigate the bankruptcy process. Understanding the available exemptions, and how they can be used to protect assets, is an important part of the bankruptcy process. If you are considering filing for bankruptcy, it is recommended that you speak with an experienced bankruptcy attorney who can help you understand the exemptions available to you and how they can be used to protect your assets.

Leeders Law is happy to offer you a free consultation to discuss how they can use the bankruptcy exemptions to your advantage.

The post Illinois bankruptcy exemptions appeared first on Chicago Bankruptcy Lawyer.

Can I keep my bank account when I file bankruptcy?

Yes, you can keep your bank account when you file bankruptcy.  Many people assume that they cannot keep basic things when filing for a bankruptcy.  This is not true. You can keep a bank account, the banks typically will not close your bank account.  One exception would be if you owed your bank money where you have your checking account or savings account, but usually they would just require you to pay the overdraft before they will let you continue business as usual.

Exempt Bank Account

Checking and savings accounts are listed on Schedule B of the bankruptcy petition.   You would then list any available exemption to protect the funds in those accounts.   In Illinois, debtors use the wildcard exemption to protect the money in bank accounts.  The Illinois Code section is 735 Ill. Comp. Stat. 5/12-1001 (b).   This states that “personal property, owned by the debtor, is exempt from judgment, attachment, or distress for rent: b) The debtor’s equity interest, not to exceed $4,000 in value, in any other property.”  So, using the Illinois bankruptcy exemptions, you can protect up to $4,000 in your bank accounts.   This wildcard is also used for furniture, electronics, cell phones, computers, jewelry, and other household goods, so it is important to talk with your experienced bankruptcy lawyer to help you properly use your Illinois bankruptcy exemptions to protect your bank accounts and other assets.

Setoff of a bank account

In bankruptcy, setoff is where you would owe a creditor money, and they are holding funds on your behalf.  The most common setoff is where you have a bank account and owe that same bank money.  The bank is allowed to use the funds being held and apply that to the debt you owe.   Most often, I see credit unions do this most often.  In their security agreements when you open the accounts or incur the debt by taking a loan or a credit card, it states in that small print that you are pledging the bank account as collateral for the debt.  Setoff, is, unfortunately, permitted by 11 U.S.C. § 553.

How do I prevent setoff of my bank account?

The easiest way to prevent setoff is to minimize the amount of money in that account held by a bank or credit union to whom you owe money.   Simple.  Just open a checking or savings account at any other bank where you do not owe money, and change your direct deposits and automatic withdrawals to that new account.  Keeping the setoff bank account at a minimum prevents the creditor from grabbing those funds once you file for bankruptcy protection.

Free consultation with a Chicago bankruptcy lawyer

Finally, feel free to contact me for a free bankruptcy consultation and I can show you how I can protect your bank account in bankruptcy.

The post Bankruptcy -B is for Bank Account appeared first on Chicago Bankruptcy Lawyer.

SCHEDULES

A debtor fills out the bankruptcy paperwork and forms when filing a bankruptcy case.  These forms are the Bankruptcy Schedules.   Bankruptcy schedules list all of the assets a debtor owns.  These schedules also list all of the debts that the filer has.  Also, they list down the monthly income and monthly expenses of the debtor too.   Today, however, we will talk about -Assets.

Assets are the things that a bankruptcy debtor owns, such as real estate, vehicles, furniture, jewelry and such.  It also includes items like cash, bank accounts, retirement plans, life insurance and others, such as a workers compensation claim, or a personal injury case.

A debtor lists (or schedules) these belongings on Schedule A and Schedule B of the bankruptcy petition.    Schedule A is where the debtor lists the real estate and property they own.   Things scheduled on Bankruptcy Petition Schedule A are: homes, vacant land, timeshares, mobile homes and the like.   Schedule B contains everything else owned by the debtor.    These assets would include a debtor’s car, bank account, cash, household goods, electronics, furniture, interests in businesses, animals, jewelry, insurance policies, retirement plans, investments, inheritances, claims against third parties.   Assets that also must be listed are sporting equipment, clothing, savings bonds, luxury items like boats, planes, collectibles, antiques, tax refunds, money owed to the debtor, and any other possible thing that you own, or is owed to you.   The list above is not exhaustive.

UNLISTED ITEMS

Many debtors I speak to ask me questions about what they need to list on their schedules of assets.   In short, I tell them to list everything.   Often, debtors ‘forget’ about assets that are not tangible.  For example, when a loved one dies a debtor may inherit their home.   A debtor says “this house isn’t mine” when they have not transferred title yet.    A debtor lists this home on schedule A.   Unpaid personal loans also fit this bill.   Just because they haven’t paid you back yet, doesn’t mean you don’t have the right to that money, now or sometime in the future.  The loan belongs on Schedule B.

EXEMPTIONS

Debtor’s also often want to avoid listing stuff that they ‘don’t want to lose.’  This is completely understandable.  Good news, though.  Bankruptcy attorneys can protect (or exempt) the stuff that you have.   Schedule C is where the bankruptcy lawyer will list down these exemptions and protections for your assets, granted either by the state (here are the Illinois Bankruptcy exemptions), or by the bankruptcy code, depending on where you live, and how long you have lived there.   These are often broad, and vary by state to state.  I’ll talk more about bankruptcy exemptions at a later date.

Assets that are exempt, are not part of the the bankruptcy estate, and aren’t sold by the bankruptcy trustee.  Only unexempted assets are available to the bankruptcy trustee.  The trustee’s job is to determine if there is enough value in the unexempt belongings to make a beneficial payout to the creditors of the debtor in bankruptcy.  The US Bankruptcy Code requires a debtor to schedule all assets, regardless if they are exempt or not.

BANKRUPTCY TRUSTEE

The good news for bankruptcy filers is that chapter 7 bankruptcy trustees liquidate very few belongings.  However, when a trustee finds assets that have not on schedule A or B, the trustee can liquidates them.    If you have assets, tell your lawyer.  Your lawyer can usually protect them.  The goal for a chapter 7 case is for the bankruptcy trustee to file a ‘No-Asset Report.’

A good bankruptcy attorney would recommend chapter 13 if they see a debtor has assets that are worth more than can be exempted, and would review that process with the bankruptcy client if they wish to protect the assets while getting debt relief.    This is why it is important to tell your bankruptcy lawyer about all of the assets you have.  Their are protections for most, and it’s better to know sooner than later, especially since filing false documents in bankruptcy is a crime, and a debtor could be denied a bankruptcy discharge, or worse, be charged with a crime subject to fines and jail time if convicted!

The post Bankruptcy – A is for Assets appeared first on Chicago Bankruptcy Lawyer.