Bankruptcy in Illinois (2026): Exemptions & Means Test

Bankruptcy is a federal process, but the property you can keep and the income test that applies to you in Illinois are shaped by Illinois law. Illinois has opted out of the federal bankruptcy exemptions, so residents use the state exemption list, and those amounts were substantially increased effective January 1, 2026.

This guide is part of our Bankruptcy by State series. It is general legal information, not legal advice, and the dollar figures below change periodically, so confirm current amounts before relying on them.

Does Illinois use state or federal bankruptcy exemptions?

Federal law lets each state decide whether its residents may choose the federal exemption list in 11 U.S.C. 522(d) or must use the state's own exemptions. Illinois is an opt-out state. Under 735 ILCS 5/12-1201, Illinois residents must use the Illinois exemptions and cannot elect the federal 522(d) list. If you recently moved to Illinois, the federal domicile rules in 11 U.S.C. 522(b)(3) can require you to use another state's exemptions for a period, so the list that applies depends on your residency history.

Illinois homestead exemption

The homestead exemption protects equity in a residence you or a dependent occupies. Under 735 ILCS 5/12-901, the exemption is $50,000 of equity per individual, and where two or more people own the property, the aggregate exemption is $100,000. These figures took effect January 1, 2026 under Public Act 104-120, which raised the long-standing amounts of $15,000 per person and $30,000 for joint owners.

The homestead covers a home, condominium, cooperative, or mobile home used as a residence. Because the figure changed for 2026 and could be amended again, confirm the current amount for your filing date.

Motor-vehicle, wildcard, and personal-property exemptions

Illinois's other key personal-property exemptions appear in 735 ILCS 5/12-1001, and several were increased effective January 1, 2026:

• Motor vehicle: up to $3,600 of equity in one motor vehicle (raised from $2,400).
• Wildcard: $4,000 of equity in any personal property of your choosing, which renters and homeowners with little equity can apply to cash, a vehicle, or other assets.
• Tools of the trade: up to $2,250 in implements, professional books, and tools of your trade (raised from $1,500).
• Necessary personal property: necessary wearing apparel, family pictures, schoolbooks, and a defined set of household goods are exempt, and prescribed health aids are protected.
• Wages: Illinois wage-deduction law and federal limits protect a portion of earnings from garnishment, and most retirement accounts, public benefits, and certain insurance proceeds are also protected under Illinois statutes.

These amounts are set by statute and subject to amendment, so verify current figures before relying on them.

The Chapter 7 means test in Illinois

The means test determines whether your income is low enough to file Chapter 7 without a presumption of abuse. The first step compares your household's current monthly income, annualized, to the median family income for an Illinois household of your size as published by the U.S. Trustee Program (justice.gov/ust). At or below the median, you generally pass the first step; above it, a more detailed calculation of allowed expenses and disposable income applies.

For cases filed on or after April 1, 2026, the U.S. Trustee Program lists Illinois median family income as:

• 1 earner: $73,180
• 2 people: $93,934
• 3 people: $113,625
• 4 people: $137,902
• Add $11,100 for each individual in excess of four.

The U.S. Trustee Program updates these figures periodically, typically about twice a year, so check the current table for your filing date.

Chapter 7 vs. Chapter 13

Chapter 7 is a liquidation: a trustee may sell non-exempt property to pay creditors, and most remaining unsecured debts are discharged, often within a few months. Because Illinois's exemptions protect a defined amount of property, many filers keep everything they own. Chapter 7 suits people with limited income and mostly unsecured debt such as credit cards and medical bills.

Chapter 13 is a reorganization for people with regular income who want to catch up on a mortgage or car loan, or whose means-test calculation raises a presumption of abuse in Chapter 7. You repay some or all of what you owe through a court-approved plan lasting three to five years, then receive a discharge of remaining eligible balances.

In both chapters, filing triggers the automatic stay under 11 U.S.C. 362, which immediately halts most collection efforts, including foreclosure sales, repossessions, lawsuits, and wage garnishment, while the case proceeds.

Where you file in Illinois

Illinois is served by three federal bankruptcy districts. You file in the district that covers the county where you have lived for the greater part of the last 180 days:

• U.S. Bankruptcy Court for the Northern District of Illinois (Chicago and Rockford), covering the northeastern counties.
• U.S. Bankruptcy Court for the Central District of Illinois (Peoria, Springfield, Urbana, Danville), covering central Illinois.
• U.S. Bankruptcy Court for the Southern District of Illinois (East St. Louis, Benton), covering the southern counties.

What bankruptcy can and cannot do

Most unsecured debts, such as credit cards, medical bills, and personal loans, are dischargeable. Some obligations generally are not, including most student loans, recent income taxes, child support and alimony, and debts from fraud. Before filing, the law requires credit counseling from an approved agency, and a debtor-education course is required before discharge. Bankruptcy has long-term effects on credit and is not right for everyone, so ask an Illinois lawyer for a free bankruptcy evaluation weighing Chapter 7 against Chapter 13 for your debts (attorney advertising).

Frequently Asked Questions

Does Illinois use state or federal bankruptcy exemptions?

Illinois has opted out of the federal exemptions under 735 ILCS 5/12-1201. Residents must use Illinois's state exemptions and cannot choose the federal list in 11 U.S.C. 522(d), subject to the federal domicile rules for people who recently moved to the state.

What is the homestead exemption in Illinois?

Under 735 ILCS 5/12-901 it is $50,000 of home equity per individual, or $100,000 where two or more people own the property, for cases on or after January 1, 2026. Public Act 104-120 raised these amounts from the prior $15,000 and $30,000. Confirm the current figure for your filing date.

What is the Illinois median income for the means test?

For cases filed on or after April 1, 2026, the U.S. Trustee Program lists Illinois median family income as $73,180 for 1 person, $93,934 for 2, $113,625 for 3, and $137,902 for 4, adding $11,100 per additional person. These figures update periodically.

Will I lose my house or car in an Illinois bankruptcy?

Often no. The homestead exemption protects home equity up to $50,000 per individual, and the $3,600 motor-vehicle exemption protects car equity. If your equity is within these limits and you stay current on secured payments, you can typically keep the property. Equity above the exemptions may be at risk in Chapter 7 but can often be addressed in Chapter 13.

How much can the Illinois wildcard exemption protect?

The wildcard under 735 ILCS 5/12-1001 protects $4,000 of equity in any personal property you choose, so filers with little or no home equity can apply it to cash, a vehicle, or other assets.

Which bankruptcy court handles my Illinois case?

You file in the Northern, Central, or Southern District of Illinois, depending on the county where you have lived for most of the past 180 days. The Northern District covers Chicago and Rockford.

What is the automatic stay?

The automatic stay under 11 U.S.C. 362 takes effect when you file and immediately stops most collection actions, including foreclosure, repossession, lawsuits, and wage garnishment, while your case is pending.

Can bankruptcy erase all of my debts?

No. Most unsecured debts are dischargeable, but obligations such as most student loans, recent taxes, child support, alimony, and debts from fraud generally are not.