Protecting Your Assets in Chapter 7
Many individuals worry that they will lose their assets if they file for Chapter 7 bankruptcy. In fact, most Chapter 7 filers do not loose any assets!
Under Illinois law, limitations are placed upon a creditor's ability to use a debtor's assets to satisfy debts. If a debtor asserts a statutory exemption right, the debtor can thereby protect any given asset up to the dollar limit of the applicable exemption.
If the debtor files for bankruptcy, these same statutory exemptions operate to protect the assets from liquidation to the extent that the assets' values fall within limits of the applicable exemptions.
In many cases, all of the debtor's assets will be protected. In some cases, though, the exemption protections are not sufficient to protect the assets. When the exemptions are insufficient, the debtor can usually protect their assets by filing for Chapter 13 bankruptcy.