R|S|P ROBBINS, SALOMON & PATT, LTD.

Attorneys at Law

BANKRUPTCY

From the Desk of: Keeping Your Possessions When Filing for Bankruptcy
Nat Pomrenze
(312) 456-0385 People can experience life-changing events over which they have no control. A person can lose his or her job,
npomrenze@rsplaw.com go through a divorce, or become ill. These events can have financially-devastating consequences, and they are
just some of the many reasons why people file for bankruptcy. If a person decides that he or she is no longer
able to pay bills, then bankruptcy can be a way out from under the burden of debt

But filing for bankruptcy can be a complex and confusing process. There are many factors and issues to con-
sider. For example, people going into bankruptcy often fear that they will lose all or most of their personal pos-
sessions. They might have some possessions that they may keep and some that will have to be turned over to
creditors. While every bankruptcy case needs to be individually analyzed, in most cases a debtor will not have
to give up all or any of his or her personal property. This is because the law gives each debtor what are called
“property exemptions.”

During and after a bankruptcy proceeding, exempted property is protected from the reach of creditors. The ex-
emptions permitted by the bankruptcy laws permit you to keep not only the property in your possession but also
the equity that you might have in such property. Equity is the dollar difference between the fair market value of
exempted property and the amount of debt that is owed on such property. The most common examples of eq-
uity involve a debtor’s home or automobile. Under federal bankruptcy law, each state’s laws determine the
amount of the exemption granted to the debtor for various classes of real or personal property. Here is a short
list of bankruptcy exemptions in Illinois:

Exemptions that are limited and have a dollar cap:

Homestead (equity in residence) - $15,000 in value (double if married)

Automobile - $2,400 in value in one motor vehicle (double if married)
Tools of the trade - $1,500 in value
Wildcard (for any other personal property except wages) – $4,000 in value

RSP CHICAGO Exemptions that are unlimited and have no dollar cap:
25 East Washington Street
Suite 1000 Personal clothing
Chicago, IL 60602 Health aids
Tele. (312) 782-9000 Insurance and disability benefits
Fax (312) 782-6690
Pensions, IRAs, ERISA qualified benefits, public employee retirement benefits
Unemployment benefits
Workers compensation payments
Public aid, social security or veteran’s benefits
Household items such as family pictures, school supplies, clothes, etc.
Alimony and child support
RSP GLENVIEW Money deposits in pre-paid tuition trust funds like Bright Start
2222 Chestnut Avenue
Suite 101
Glenview IL 60026 Going through bankruptcy involves significant legal consequences. A debtor needs to make sure that he or she
Tele. (847) 729-7300 is doing the right things. Whatever decision a person makes regarding a bankruptcy, that person needs to act
Fax (847) 729-7390 on the advice of experienced legal counsel. In order to correctly use the different types of property exemptions
for personal possessions, it is important that one seek the counsel and advice of a qualified bankruptcy lawyer.

Nathaniel Pomrenze is an attorney whose practice concentrates in personal and business bankruptcy law. He
can be reached at (312) 456-0385 and at npomrenze@rsplaw.com.
© 2010, Nat. Pomrenze

www.rsplaw.com |