Chapter 7 Bankruptcy is used to eliminate debt. It is often referred to as “liquidation” or a “straight” bankruptcy because virtually all debt is eliminated. However, not all debt is automatically eliminated or discharged. Some of the types of debt that can survive a Chapter 7 case include: child support, alimony, parking tickets, many student loans and certain tax debt. Once we know the facts of your case, we can tell you what debt you are able to discharge.
One of the biggest concerns that people have in Chapter 7 is about losing assets. In a Chapter 7 case, a trustee is appointed to review your case and determine whether or not you own anything of value that can be sold to reapy your creditors. Now that may sound scary but you should know that most people filing Chapter 7 do not lose ANY assets. The Bankruptcy laws allow you to protect your assets using “exemptions.”
What exemptions you are allowed to use differ based upon the State in which you reside. In Illinois, the state law exemptions are used to protect a certain portion of equity or value you have in the assets you own. The following is a partial ist of personal property is exempt from asset seizure in Illinois:
Up to $15,000 worth of real property per person (condo, mobile home, co-op, farm)
Personal injury recoveries not exceeding $15,000
Personal vehicle up to $2,400 value
Qualified pension, IRA or other qualified retirement account
Social Security and Disability benefits
Life insurance and annuities (restrictions apply)
Tools and other items used as part of a trade
Wild Card = up to $4,000 worth of personal property
If spouses file for Chapter 7 Bankruptcy jointly, many of the above exemptions are doubled. The following is a link for a complete list of Illinois exemptions.