Chapter 7 Success Lawyers Chicago - Exemptions

Exemptions

In Illinois, they allowed specific exemptions. Let’s take for example a home.
Let’s go through exemptions because that’s kind of a tricky word. What is an exemption, under the state of Illinois? What does that mean?
That’s the amount of money that they allow you to deduct to have and still go through with your bankruptcy. People are familiar with homes, their familiar with the term you mentioned earlier, which was equity. Suppose you purchase it for a certain price, you make payments and hopefully over time you’re not just paying principal and you build up a little bit of money. And it depends upon what you do and how much it is. So, let’s say somebody has $15,000.00 worth of equity in their house and they want to do a Chapter 7. Is that going to be available to them? They can protect as an individual up to $15,000.00 or if it’s a married couple they can combine that for $30,000.00. Now, basically what that means is if the house is worth $200,000.00 and they owe $175,000.00 to pay it off, they’re going to be protected. All they have to do is continue to make their regular monthly mortgage payment. I think that’s one of the important things too, that people don’t realize as well. But, bankruptcy gives you a fresh start but, for those secured items like your house and your car, things of that nature. You still have to pay the creditor back. If you want the car, you’re going to have to make good on your original agreement with them. And the house you’re going to have to remain current and you’re going to have to pay everything that’s in arrears or delinquent, right?
That’s correct. The true fresh start comes from eliminating medical bills, credit cards, personal loans, utilities, things like that. Repossessed autos, it stops the garnishments as well. Well, what happens then about furniture and jewelry? Say I have a nice leather couch or a nice watch that I would like to keep. Am I going to be able to keep those things or just my clothes, my suit?
It depends upon if those items are paid for or not. If they’re not paid for, they’re just treated the same way as the vehicle or the home. If the debtor’s wants to keep those items, they need to continue to pay. If they’re already paid for and they fall within a certain dollar amount, for example, you can protect up to $4,000.00 worth of personal property. So, in that case, if you apply the $4,000.00 spread over your couch and over your watch and clothing and miscellaneous items, you’ll be able to keep them free and clear while being able to eliminate all of the other debt that we mentioned.

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