How to File for Illinois Bankruptcy

Declaring bankruptcy in Illinois is governed by federal law, as is bankruptcy in all U.S. states. There are parts of the process that are governed by state statute resulting in differences that affect who can file, and which assets are protected, in each state. This page will show you how to file for Illinois bankruptcy.
Disclaimer

The content in this page is not a substitute for professional financial advice. Please contact your financial adviser before using the information presented here.

Introduction
- Bankruptcy is a process governed by the federal courts, but the specifics are influenced by your state of residence. So, while the procedures you use to file are the same in all states, which type of bankruptcy you qualify for, and which assets you're permitted to keep will be governed by Illinois statute.
Should I File for Bankruptcy?

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Step 1: What is Chapter 7 Bankruptcy?
- Chapter 7 bankruptcy involves selling off most of your assets and giving the proceeds to your creditors under a court sanctioned arrangement. Your creditors need to accept the court agreed partial payment as full settlement of the amount you owe. Not all assets need to be sold, and not all debts will be expunged. In certain cases, a Chapter 13 bankruptcy, where the court requires creditors to accept a modified payment schedule, but your debts are not reduced, is a more appropriate choice.
Step 2: Chapter 7 Illinois Income Test
- You may qualify to elect Chapter 7 bankruptcy if your income is below the Census Bureau determined median income for similarly sized families in Illinois.
1. Single individual: $44,673Lawyers.com: Bankruptcy in Illinois
2. Two people: $56,545Lawyers.com: Bankruptcy in Illinois
3. Three people: $66,607Lawyers.com: Bankruptcy in Illinois
4. Four people: $77,634Lawyers.com: Bankruptcy in Illinois
- If your income is over these levels, you may still qualify for Chapter 7 bankruptcy, depending on your individual situation. You will not qualify for Chapter 7 bankruptcy if either of the following situations applies to you:
1. If you have more than $166.67 in current monthly income after certain deductions for living expenses allowed by the court, not including your unsecured debts.deductions.
2. If you have more than $100 in current monthly income after certain deductions for living expenses allowed by the court and the amount of income is sufficient to pay at least 25% of your general unsecured debt over five years.
Step 3: Chapter 7 Illinois Exemptions
- In Illinois, your home will only be exempt from bankruptcy if you have less than $7,500 in equity. If you have more than that, and want to keep your home, you may want to discuss whether or not you qualify for Chapter 13 bankruptcy with a bankruptcy lawyer.Lawyers.com: Bankruptcy in Illinois Other assets that you may keep as part of a Chapter 7 bankruptcy in Illinois include:
1. Unemployment, disability, workers' compensation, veterans' and social security benefitsLawyers.com: Bankruptcy in Illinois
2. Proceeds from retirement plans, life insurance, or wrongful death actionsLawyers.com: Bankruptcy in Illinois
3. Personal clothing and school booksLawyers.com: Bankruptcy in Illinois
4. Professional books and tools of the trade up to $750 in valueLawyers.com: Bankruptcy in Illinois
5. Family photos and bibleLawyers.com: Bankruptcy in Illinois
6. Health aidsLawyers.com: Bankruptcy in Illinois
7. Personal injury recoveries up to $7500Lawyers.com: Bankruptcy in Illinois
8. $2000 of any additional personal propertyLawyers.com: Bankruptcy in Illinois
9. Alimony and child supportLawyers.com: Bankruptcy in Illinois
10. Property owned by a business partnershipLawyers.com: Bankruptcy in Illinois