What Assets Are Exempt from Liquidation During Chapter 7 Bankruptcy in Illinois?

 Posted on January 05,2023 in Estate Planning / Probate

Anyone can find themselves facing bankruptcy. Whether caused by job loss, medical bills, an unmanageable mortgage, or other reasons, bankruptcy can be a difficult and stressful experience. For those facing Chapter 7 bankruptcy, the prospect of liquidation of assets can be foreboding. However, some assets are exempt from liquidation during this process. Certain items cannot be touched by creditors or the court-appointed trustee who will oversee the liquidation process.

Exemptions During Liquidation Bankruptcy

Many people hesitate to even consider bankruptcy because they assume that they will lose all of their possessions. Chapter 7 bankruptcy is often called "liquidation bankruptcy" because certain assets must be sold in order to raise money for creditors. However, those filing for Chapter 7 bankruptcy in Illinois may be eligible for exemptions that will protect certain assets from liquidation.

The following are a few of the more common types of property exempt from liquidation during Chapter 7 Bankruptcy in Illinois:

• The equity in your home – The Illinois homestead exemptions allow individuals to protect up to $15,000 of their equity in a single-family home.
• Motor vehicles – Individuals can protect up to $2,400 of the equity in their car.
• Wages – Wages earned by the debtor are generally exempt from liquidation during Chapter 7 bankruptcy. Typically, 85 percent of your gross earnings or 45 times the federal minimum hourly wage per week are exempt.
• Household items – Items such as furniture, appliances, clothing, books, and musical instruments may be exempt from liquidation during Chapter 7 bankruptcy in Illinois.
• Retirement accounts – Retirement funds deposited with a governmental agency or qualified private retirement plan are exempt from liquidation.
• Public benefits – Assets such as Social Security, welfare, public assistance, veteran's benefits and unemployment compensation are exempt from liquidation.
• Tools of the trade – Individuals may protect up to $1,500 in tools or other assets necessary for their employment.
• Sentimental and personal property – Things like family pictures, wedding rings, and other items of sentimental value are typically exempt from liquidation.

Although filing for Chapter 7 bankruptcy may seem intimidating, it does not necessarily mean that you will lose all of your assets. By understanding the exemptions available in Illinois, you can ensure that certain personal items and possessions remain yours during the bankruptcy process.

Contact our Geneva Bankruptcy Lawyer

At DLAW, PC, we are here to help you understand the process of filing for Chapter 7 bankruptcy in Illinois. Our skilled team can review your assets and determine which items might be exempt from liquidation. To learn more about bankruptcy or to schedule a free consultation, contact us today. Call our Kane County bankruptcy attorneys at 331-222-7978.

Source:

https://www.investopedia.com/terms/c/chapter7.asp