How to Declare Bankruptcy in Illinois

By Heather Frances J.D.

Bankruptcy can help you clean up your finances and start fresh. Declaring bankruptcy means filing a bankruptcy petition and other paperwork in a United States District Bankruptcy Court. Since bankruptcy is governed by federal law, the process for filing is essentially the same in every state, but certain aspects of the process are determined by state law.

Bankruptcy can help you clean up your finances and start fresh. Declaring bankruptcy means filing a bankruptcy petition and other paperwork in a United States District Bankruptcy Court. Since bankruptcy is governed by federal law, the process for filing is essentially the same in every state, but certain aspects of the process are determined by state law.

Before You File

In every state, you must complete a qualified credit counseling course before you can file your bankruptcy case. You must also choose what type of personal bankruptcy case you will file: a Chapter 7 bankruptcy, which is a liquidation of assets, or a Chapter 13 bankruptcy, which is a plan to repay all or part of your debt. The type of bankruptcy you choose determines which forms you will use to start your case.

Get a free, confidential bankruptcy evaluation. Learn More

Chapter 7 Qualifications

Not everyone can file for Chapter 7, as you must pass a means test to qualify. If your income is less than Illinois’ median income, you can file. As of November 1, 2012, the median income for one earner in Illinois is $46,522, and the amount increases by family size. For example, the median income for a family of four is $79,138. If you make more than the median income for your family size, your net monthly income over five years must be less than $11,725 or a certain percentage of your debt. If you do not qualify for a Chapter 7 case, you can file for a Chapter 13 bankruptcy.

Exemptions

In the bankruptcy system, exemptions are categories of assets that are not included in your bankruptcy estate. In Chapter 7 bankruptcy, exemptions determine what property you can keep, such as your home, car, pension or personal belongings. The goal of exemptions is to allow you to get your life back on track during and after bankruptcy rather than losing your basic necessities through your bankruptcy case. If property is non-exempt, the court-appointed bankruptcy trustee may sell it to pay your creditors. By the time your exempt property is removed from consideration in your bankruptcy case, there are often no remaining assets to sell. In Chapter 13 bankruptcy, exemptions determine how much you have available to pay creditors under your repayment plan.

Illinois Exemptions

In some states, you can choose which exemptions you want to use, federal or state. However, Illinois requires you to use the state exemptions. Illinois exemptions include a vehicle up to $2,400 in value, clothing, family pictures, some life insurance proceeds and certain retirement plans. Illinois even has a “wildcard” exemption under which personal property up to $4,000 ($8,000 for married couples) can be excluded even if it doesn’t qualify under any other exemption. Illinois also allows you to exempt up to $15,000 in home equity per person filing. However, you must have some recorded ownership interest in the property, so unless both spouses are listed on the title of their home, they cannot both qualify for the $15,000 exemption.

Filing

To initiate your bankruptcy case, you must file a bankruptcy petition along with the required forms and schedules for your type of case. These required forms are available from the bankruptcy court or online, and Form 200 describes the exact paperwork required for each type of case. You must also pay the appropriate filing fee at the time of filing, or you may make arrangements to pay it in installments or have it waived.

Get a free, confidential bankruptcy evaluation. Learn More
Guidelines for Filing Chapter 13 in Minnesota

References

Related articles

Things to Know Before Filing for Bankruptcy in Hawaii

Bankruptcy can be a good option for those who feel overwhelmed by debt, though bankruptcy isn’t for every situation. For example, you must be a resident of Hawaii for 90 days before filing. In addition, your options in the state are different than those in other states since Hawaii has its own wage and exemption standards. If you decide to file a bankruptcy case, an attorney or online legal services provider can help.

Chapter 13 Bankruptcy Laws in Delaware

Filing for bankruptcy can give you a financial fresh start; individuals typically file under Chapter 7 or Chapter 13. Bankruptcy is governed by federal law, not Delaware state law, though some aspects of your bankruptcy case may be state-specific. For example, Delaware bankruptcy cases must be filed in the United States Bankruptcy Court for the District of Delaware, located in Wilmington.

How to Fill Out a Bankruptcy Schedule C

When you file for bankruptcy, there are several forms you must complete to initiate your case. For example, you will file a bankruptcy petition with the bankruptcy court clerk that states your intention to file for bankruptcy. In addition, you must complete several schedules, including Schedule C, which lists the exemptions you wish to take in your bankruptcy case.

Related articles

How to File Bankruptcy in Washington State

If your debts are beginning to overwhelm you, you may be considering bankruptcy to help you get back in control of your ...

South Carolina Bankrupty Laws

South Carolina residents who are burdened with debt can get a clean slate financially by filing for bankruptcy at the ...

How to File Chapter 13 in New Hampshire

Chapter 13 bankruptcy can help you, as a debtor, prevent home foreclosure, make up missed car or mortgage payments, and ...

Steps for a Bankruptcy in Colorado

Bankruptcy gives a debtor a fresh start by helping him dig out from a debt hole. There are several types of bankruptcy ...

Browse by category