A major concern clients have when they hire a bankruptcy attorney is whether filing for bankruptcy means that they will lose their homes. The good news is that it doesn’t have to, regardless of what kind of bankruptcy you choose. The equity in your home may also be protected, thanks to the homestead exemption. Homestead exemptions vary from state to state, so your bankruptcy lawyer can explain how the exemption applies to you. Here are the answers to some questions people frequently have about the exemption when they file for bankruptcy in Illinois.
What is the homestead exemption?
The homestead exemption is one of a list of bankruptcy exemptions that exist to protect you from losing everything in your case settlement. It allows you to exclude a certain amount of equity in your home from your bankruptcy case. That means it cannot be used to pay off your creditors as part of your settlement. The homestead exemption is available in both Chapter 7 and Chapter 13 bankruptcy cases.
How much is the homestead exemption in Illinois?
In Illinois, single homeowners are allowed to exempt up to $15,000 of equity or other property or money that falls into the exemption category. This can include money made on the sale of a home for up to one year from the date of the sale. Married homeowners can claim an exemption of $30,000. To use the homestead exemption, your name must be on the deed of the property. Married couples must have both of their names on the exemption in order to claim the full amount.
Can I use the federal exemption instead?
There is a federal homestead exemption in bankruptcy law, and some states allow people who file to use either their state exemption or the federal one, depending on their preferences. In Illinois, you may only use the state exemption and cannot opt to use the federal one.
There are many important decisions to make when filing for bankruptcy to ensure you protect as many of your assets as possible. Cutler & Associates, LTD. can help you make the right choices at all stages of your bankruptcy case. Schedule a free consultation with a bankruptcy attorney in Schaumburg by calling (847) 213-9436.