Many people believe that filing for Chapter 7 bankruptcy means that all of their property will be seized. While you may have to give up a substantial portion of your assets to repay your debts, there are a number of items that are exempt from bankruptcy liquidation. Here are some of the assets that are exempt during Chapter 7 bankruptcy under Illinois law:
In many cases, people who file for Chapter 7 bankruptcy are able to keep their homes. However, in cases where this is not possible, individual filers can retain $15,000 worth of equity in their home, and couples can keep up to $30,000. This means that if your home sells during the liquidation process, you’ll keep the equity amount, and the rest of the home’s value will be distributed among your creditors.
Sometimes Chapter 7 bankruptcy requires that part of your wages be garnished to repay debts. Certain types of income are exempt from garnishment, including public aid (TANF, AABD, and GA income), social security, Veterans Administration benefits, worker’s compensation, unemployment compensation, most pensions, and alimony.
Wage Garnishment Limitations
In addition to the income protection described above, wage garnishment from your regular income is also limited—garnishment is only possible if you make more than $371.25 a week after taxes. If you do make more than this amount, no more than 15% of your wages can be garnished from your weekly gross pay.
Personal Property Retained
A substantial amount of personal property is also exempt from Chapter 7 bankruptcy. Each family member in a bankrupt household can keep necessary clothing, school books, family photos, and a Bible. Filers can also keep up to $4,000 in property (including cash), one car with less than $2,400 interest owed, and up to $1,500 in job-related tools or books