Filing Chapter 7 Bankruptcy in Illinois (2026)
Reviewed by DocDraft Legal Team · Illinois · Last updated August 18, 2026
Chapter 7 bankruptcy is federal law, but the property you keep is set by Illinois. Illinois is an opt-out state: under 735 ILCS 5/12-1201 you must use Illinois exemptions and cannot choose the federal 522(d) list. Effective January 1, 2026, Public Act 104-0120 raised Illinois's key exemptions, so the homestead is now $50,000 for one owner and $100,000 for two or more, and the motor vehicle exemption is $3,600. This page explains the Illinois homestead exemption under 735 ILCS 5/12-901, the vehicle and wildcard figures under 12-1001, the means-test median income, and the three federal bankruptcy courts where Illinoisans file. Chapter 7 discharges most unsecured debt but not most student loans, recent taxes, or child and spousal support.
Does Illinois use state or federal bankruptcy exemptions?
Illinois is an opt-out state. Under 735 ILCS 5/12-1201, Illinois has opted out of the federal 11 U.S.C. 522(d) exemption list, so a debtor filing bankruptcy in Illinois must use the Illinois exemptions. Unlike a handful of choice states, you cannot elect the federal set; Illinois uses one system.
Can I keep my house if I file Chapter 7 in Illinois?
Often yes. Under 735 ILCS 5/12-901, effective January 1, 2026, the Illinois homestead exemption is $50,000 for property owned by one individual and $100,000 for property owned by two or more individuals. If your home equity fits within that amount, Chapter 7 generally lets you keep the house.
Can I keep my car if I file Chapter 7 in Illinois?
Usually yes if your equity is modest. Under 735 ILCS 5/12-1001(c), effective January 1, 2026, Illinois exempts $3,600 of equity in one motor vehicle. You can also apply the $4,000 wildcard under 12-1001(b) on top of that. If your combined equity fits, the vehicle is protected.
What is the income limit to file Chapter 7 in Illinois?
For cases filed on or after July 15, 2026, the U.S. Trustee median income figures for Illinois are $73,180 for one earner, $93,934 for two, $113,625 for three, and $137,902 for four, adding $11,100 per additional person. At or below your household figure, you pass the first part of the means test.
Illinois's Opt-Out Rule, the New 2026 Exemption Amounts, and the Three Bankruptcy Courts
Illinois is a bankruptcy opt-out state. Under 735 ILCS 5/12-1201, Illinois has opted out of the federal 11 U.S.C. 522(d) exemptions, so a debtor filing in Illinois must use the single Illinois exemption system and cannot choose the federal list. Illinois recently increased these exemptions: Public Act 104-0120 (Senate Bill 1738) took effect January 1, 2026 and raised the headline figures for the first time in over a decade. The homestead exemption under 735 ILCS 5/12-901 is now $50,000 for property owned by one individual and $100,000 for property owned by two or more, up from $15,000 and $30,000. The motor vehicle exemption under 12-1001(c) is $3,600, and the wildcard under 12-1001(b) remains $4,000 in any personal property, which you can stack on other assets, including a car. The tools-of-trade exemption under 12-1001(d) rose to $2,250. Illinoisans file in one of three federal bankruptcy courts: the U.S. Bankruptcy Court for the Northern District (Chicago and northern counties), the Central District (Peoria, Springfield, Urbana), or the Southern District (East St. Louis and Benton), based on where they have lived for most of the prior 180 days.
Relevant Laws
Illinois Homestead Exemption (735 ILCS 5/12-901)
Sets the Illinois homestead exemption. As amended by Public Act 104-0120 effective January 1, 2026, it protects $50,000 of equity for property owned by one individual and $100,000 for property owned by two or more individuals. This is the exemption that lets many Illinois homeowners keep their house in Chapter 7.
Illinois Opt-Out From Federal Exemptions (735 ILCS 5/12-1201)
The statute by which Illinois opts out of the federal 11 U.S.C. 522(d) exemptions. Because of this section, a debtor filing bankruptcy in Illinois must use the Illinois exemptions and cannot choose the federal list, making Illinois a single-system opt-out state.
Illinois Personal Property, Vehicle, and Wildcard Exemptions (735 ILCS 5/12-1001)
Lists the Illinois personal property exemptions: subsection (a) protects a bible, family pictures, schoolbooks, necessary clothing, and prescribed health aids; (b) is the $4,000 wildcard in any personal property; (c) exempts $3,600 in one motor vehicle; and (d) exempts $2,250 in tools of the trade. The 2026 figures reflect Public Act 104-0120.
Federal Bankruptcy Code Exemptions and Means Test (11 U.S.C. 522, 707)
The federal law behind Chapter 7. Section 522(b)(2) lets a state opt out of the federal 522(d) exemptions, which Illinois has done, and section 707(b) sets the means test measured against state median income.
Regional Variances
Illinois Chapter 7 Exemption Table
Homestead
735 ILCS 5/12-901: $50,000 of equity for property owned by one individual, or $100,000 for property owned by two or more individuals, effective January 1, 2026 under Public Act 104-0120. Applies to a house, condo, co-op, or mobile home you occupy as a residence.
Motor vehicle
735 ILCS 5/12-1001(c): $3,600 of equity in one motor vehicle, effective January 1, 2026. Equity above the figure may be reachable by the trustee, but you can stack the 12-1001(b) wildcard on the vehicle to protect more.
Wildcard
735 ILCS 5/12-1001(b): $4,000 of equity interest in any personal property. This flexible exemption can be applied to cash, a bank account, a car above the vehicle limit, or other assets. Public Act 104-0120 added an automatic $1,000 deposit-account protection within this amount.
Personal property
735 ILCS 5/12-1001(a): a debtor's necessary wearing apparel, bible, family pictures, schoolbooks, and prescribed health aids are exempt without a dollar cap. 12-1001(h) also protects certain awards, such as personal injury recoveries up to $15,000 and wrongful death and public benefit payments.
Wages
735 ILCS 5/12-803: wage garnishment is limited to the lesser amount, so the debtor keeps the greater of 85 percent of gross weekly wages or 45 times the federal or Illinois minimum hourly wage, whichever is higher. Only the portion above that protected floor can be garnished.
Retirement and tools
735 ILCS 5/12-1006 fully exempts interests in qualified retirement plans, including 401(k)s, IRAs, pensions, and public-employee plans. Tools of the trade, professional books, and implements are exempt up to $2,250 under 735 ILCS 5/12-1001(d) as of January 1, 2026.
Suggested Compliance Checklist
Confirm the current Illinois means-test median income
Before you file days after startingCheck your household size against the U.S. Trustee Illinois median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $73,180 for one, $93,934 for two, $113,625 for three, and $137,902 for four, adding $11,100 per additional person.
Complete the pre-filing credit counseling course
Within 180 days before filing days after startingTake an approved credit counseling course from a provider authorized for your Illinois district and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed.
Value your assets against the 2026 Illinois exemptions
Before preparing your schedules days after startingValue your home, vehicle, and personal property and match them to the current Illinois exemptions: the 735 ILCS 5/12-901 homestead ($50,000 single or $100,000 joint), the $3,600 vehicle exemption, and the $4,000 wildcard under 12-1001(b). The higher Public Act 104-0120 figures apply to cases filed on or after January 1, 2026.
Prepare and file your petition and schedules
Filing day days after startingFile your petition, schedules, and exemption claims in the correct court: the Northern, Central, or Southern District of Illinois, based on where you have lived for most of the prior 180 days. Filing triggers the automatic stay that pauses collection and garnishment.
Attend the 341 meeting and finish the debtor education course
Before discharge days after startingAttend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help with contested exemptions.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| Confirm the current Illinois means-test median income | Check your household size against the U.S. Trustee Illinois median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $73,180 for one, $93,934 for two, $113,625 for three, and $137,902 for four, adding $11,100 per additional person. | - | Before you file |
| Complete the pre-filing credit counseling course | Take an approved credit counseling course from a provider authorized for your Illinois district and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed. | - | Within 180 days before filing |
| Value your assets against the 2026 Illinois exemptions | Value your home, vehicle, and personal property and match them to the current Illinois exemptions: the 735 ILCS 5/12-901 homestead ($50,000 single or $100,000 joint), the $3,600 vehicle exemption, and the $4,000 wildcard under 12-1001(b). The higher Public Act 104-0120 figures apply to cases filed on or after January 1, 2026. | - | Before preparing your schedules |
| Prepare and file your petition and schedules | File your petition, schedules, and exemption claims in the correct court: the Northern, Central, or Southern District of Illinois, based on where you have lived for most of the prior 180 days. Filing triggers the automatic stay that pauses collection and garnishment. | - | Filing day |
| Attend the 341 meeting and finish the debtor education course | Attend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help with contested exemptions. | - | Before discharge |
Frequently Asked Questions
Yes. Under 735 ILCS 5/12-1201, Illinois has opted out of the federal 11 U.S.C. 522(d) exemption list. A debtor filing bankruptcy in Illinois must use the Illinois exemptions and cannot elect the federal set. Illinois uses a single state exemption system rather than giving filers a choice between state and federal.
Under 735 ILCS 5/12-901, as amended by Public Act 104-0120 effective January 1, 2026, the Illinois homestead exemption is $50,000 for property owned by one individual and $100,000 for property owned by two or more individuals. These figures replaced the prior $15,000 and $30,000 amounts, so cases filed in 2026 use the higher numbers.
Under 735 ILCS 5/12-1001(b), Illinois lets you exempt up to $4,000 of your equity interest in any personal property. This wildcard is flexible: you can apply it to cash, a bank account, or on top of the $3,600 motor vehicle exemption. Public Act 104-0120 also added an automatic $1,000 protection for a deposit account within that $4,000.
No. Chapter 7 discharges most unsecured debt like credit cards and medical bills, but it does not erase most student loans, recent income taxes, child support, or spousal support, and it will not discharge debts from fraud. Secured debts like a car loan remain unless you surrender the collateral or reaffirm the loan.
You file in the federal bankruptcy court for your area: the U.S. Bankruptcy Court for the Northern District of Illinois (Chicago and northern counties), the Central District (Peoria, Springfield, Urbana), or the Southern District (East St. Louis and Benton). You file where you have lived for most of the prior 180 days.
Other Illinois guides
Ready to Draft Your Document?
Get AI-powered legal documents with attorney review included. Plans start at $39.99/mo.