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.

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.

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.

Get a free, confidential bankruptcy evaluation. Learn More


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.


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
How to File Bankruptcy in Washington State


Related articles

Can a Primary Residence Be Seized if You File for Bankruptcy?

Although filing for bankruptcy can help avoid being overwhelmed by debts, you may not be able to keep all your assets. This depends on the type of bankruptcy you file and whether you take the necessary steps to keep your home. However, your situation may require you to consult with a bankruptcy attorney if it’s too complicated to make these decisions on your own.

Can a Bankruptcy Court Freeze My Bank Account?

Filing for bankruptcy is often a decision fraught with angst and uncertainty. Debtors are sometimes concerned about their bank accounts and whether they will be frozen, effectively cutting them off from money they so desperately need. While it is true that assets, including money, may be seized to pay off your debts, whether your bank account will be frozen depends largely on what type of bankruptcy you file and whether the funds can be exempted under federal or state law.

What Assets Are Liquidated in a Chapter 7?

Two types of bankruptcy are popular among individual debtors: Chapter 13 and Chapter 7. In a Chapter 13 bankruptcy, you pay all or a portion of your debts over time, following an approved payment plan. Chapter 7 bankruptcy, by contrast, is the liquidation of your nonexempt assets -- if you have any -- to pay creditors. Nevertheless, you don't lose all your assets in a Chapter 7 bankruptcy -- and are granted a discharge of debts.

Related articles

Guidelines for Filing Chapter 13 in Minnesota

Personal bankruptcy can help Minnesotans with heavy debt loads get some relief and a financial fresh start. Most ...

What Is Not Exempt Under Chapter Seven Bankruptcy?

When you file for chapter 7 bankruptcy, you put your financial affairs into the hands of a federal court and a ...

Bankruptcy & Exemptions in Michigan

You can relieve a dire financial situation by filing for bankruptcy protection from creditors. The law allows you to ...

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. ...

Browse by category
Ready to Begin? GET STARTED