What About My Assets?
In a Chapter 7 bankruptcy, the bankruptcy law gives the debtor the right to "exempt" certain assets from liquidation. A common misconception about bankruptcy is that the debtor automatically loses all assets. In most Chapter 7 cases, the debtor is permitted to keep their assets.
How to Protect Assets from Liquidation
When a Chapter 7 bankruptcy case is filed, the debtor files with the court a list of all assets. The debtor also files a form called, "Schedule C," which designates certain assets as "exempt" from liquidation.
In Illinois, the Illinois exemption statute usually determines which assets can be exempted. The debtor can, for example, usually exempt up to $15,000 of equity in their primary residence, so long as the debtor actually lives at the residence. In some cases, the statute allows a married person filing individually to exempt all of the equity in the home if certain requirements are satisfied.
There are different types of exemptions for different types of assets, such as a car, household furnishings, or bank account funds.