Illinois Bankruptcy Exemptions: Protect Your Property in 2026
Illinois bankruptcy exemptions protect essential property during Chapter 7 bankruptcy. Starting in 2026, homestead exemptions increase to $50,000 for individuals and $100,000 for couples. Most Illinois filers keep everything they own thanks to generous state protections.
Get Free ConsultationIllinois bankruptcy exemptions protect essential property when you file Chapter 7. You can keep your home, car, personal items, wages, and retirement accounts. The state doesn’t allow federal bankruptcy exemptions. But Illinois offers strong protections that work for most filers.
Starting in 2026, exemption amounts will increase significantly. Homeowners get more protection. Workers keep more wages. People with modest assets can shield more property.
Maximize Your Illinois Bankruptcy Exemptions
Don't risk losing property by claiming exemptions incorrectly. Get a free consultation with an experienced bankruptcy attorney who understands Illinois' 2026 updates.
Speak With Attorney FreeMost Illinois filers keep everything they own during bankruptcy.
Why Illinois Bankruptcy Exemptions Matter
Bankruptcy exemptions protect property you need to live and work. Chapter 7 exemptions stop the trustee from selling your stuff. Without exemptions, creditors could take your car, furniture, and savings.
Chapter 7 is called “liquidation” bankruptcy. But most people don’t lose anything. Exemptions cover nearly everything.
Married couples filing jointly can double most exemption amounts. You must own the property together.
Can You Use Federal Bankruptcy Exemptions in Illinois?
No. Illinois doesn’t allow federal bankruptcy exemptions.
You must live in Illinois for at least two years before filing. Then you use Illinois state exemptions only.
Illinois exemptions are generous. They protect your home, vehicle, and personal belongings effectively.
You can still use federal non-bankruptcy exemptions. These protect Social Security, veterans’ benefits, and most retirement accounts.
Complete List of Illinois Bankruptcy Exemptions
Exemptions cover real property, personal property, and financial benefits. Each category has specific dollar limits.
Illinois Homestead Exemption
The homestead exemption protects equity in your home or land.
Current protection: $15,000 for individuals. Married couples filing jointly get $30,000 if they own the home together.
Starting January 1, 2026: $50,000 for individuals. $100,000 for joint filers.
Calculate your home equity by subtracting your mortgage from market value. If equity falls within exemption limits, you keep your home.
Personal Property You Can Keep
Illinois fully protects these essential items:
- Necessary clothing
- Bible, school books, and family pictures
- Professionally prescribed health aids
Tools of the trade exemption: $1,500 for job equipment. Increases to $2,250 in January 2026.
Motor Vehicle Exemption
Protect up to $2,400 of equity in one car. Equity equals car value minus loan balance.
If your car is worth $5,000 and you owe $3,000, your equity is $2,000. That’s protected.
Starting January 2026: $3,600 vehicle exemption.
Higher equity? Use the wildcard exemption to protect the difference.
Wildcard Exemption
Protect up to $4,000 of any personal property. Use it for extra car equity, bank accounts, or valuable items.
You cannot use wildcard exemptions for real estate or wages.
New rule starting January 1, 2026: Illinois automatically applies $1,000 of your wildcard exemption to one item. You get protection even if you forget to claim it.
Retirement and Pension Protection
Illinois protects most retirement accounts and pensions completely.
Fully exempt accounts include:
- 401(k) and 403(b) plans
- IRAs (Individual Retirement Accounts)
- ERISA-qualified retirement plans
- Public employee retirement systems
Public service pensions are fully protected. Police officers, firefighters, teachers, judges, and public employees keep their pensions.
If your retirement account is tax-exempt under federal law, Illinois protects it.
Wage Exemption
Illinois protects the greater of these two amounts:
- 85% of your gross wages
- 45 times the federal minimum hourly wage per week
Federal minimum wage is $7.25 per hour. 45 times that equals $326.25 per week.
If 85% of your weekly pay exceeds $326.25, you keep the higher amount. You’ll always have enough income for basic expenses.
Public Benefits You Can Keep
These benefits are fully exempt in Illinois:
- Aid to aged, blind, or disabled individuals
- Public assistance (EITC and child tax credits apply to future payments only)
- Social Security benefits
- Veterans benefits
- Unemployment compensation
- Workers’ compensation
- Crime victims’ compensation
- WWII Japanese American and Aleutian Islander restitution payments
Insurance Exemptions
Illinois protects these insurance benefits:
- Health and disability benefits
- Fraternal benefit society benefits
- Life insurance proceeds paid to spouse, child, or dependent
- Homeowners’ insurance proceeds: $15,000 (increasing to $50,000 in 2026)
Alimony and Child Support
Alimony and child support payments are exempt. The money must be reasonably necessary for your support or your dependents’ support.
Illinois treats these payments as essential for daily living. Creditors cannot take them.
Get Help Filing Chapter 7 in Illinois
Illinois exemptions protect most filers’ property completely. But calculating equity and applying exemptions correctly matters. One mistake could cost you valuable assets.
You can speak with a bankruptcy attorney for free to review your specific situation. An experienced attorney ensures you claim every exemption available. They maximize your protection under current and upcoming 2026 rules.