If you’re considering filing for bankruptcy in Illinois, you’re going to have a lot of questions. The more assets you have, the more questions will come with them. One of the most common questions, however, is what will happen to your car? Will you be able to keep it or will it be sold?
The motor vehicle exemption
When you file for bankruptcy, Illinois law provides protection for certain property against creditors. In fact, there is a laundry list of exemptions to bankruptcy, from home equity and clothing to health aids and property necessary to your profession. These exemptions are not unlimited – each one carries with it a maximum dollar amount which can exempted.
There is also a specific exemption for a motor vehicle you may own. It’s not much, though – only $2400. So, let’s say you own your vehicle outright and it’s worth $6000. In this case, the motor vehicle exemption only entitles you to retain $2400 of the total value. Your creditors will be able to claim the remaining $3600 to satisfy your debts.
The personal property exemption
However, you have another option, beyond the motor vehicle exemption. Illinois law provides another exemption for any personal property, known as the ‘wild card’ exemption. This exemption allows you to retain $4000 of value in property that is not otherwise exempt. And yes, it can be stacked with the motor vehicle exemption. As a result, for our example of the car worth $6000, the total exemptions which could be applied exceed the value of the car, meaning you could keep it.
It’s not easy to decide what exemptions you can use or how you should use them to your greatest advantage. If you’re considering filing for bankruptcy, take your questions and concerns to a knowledgeable professional who is experienced in bankruptcy law. They can help you develop a strategy to maximize what you retain and minimize your losses.