Can I Make a Big Purchase During an Illinois Divorce?
The question Jeff hears most often before a Chapter 7 filing is not about the process. It is about what happens to the house, the car, and the rest of it. The honest answer starts with Illinois exemption law, and as of January 1, 2026, that law got significantly more generous.
What an Exemption Actually Does
Filing Chapter 7 does not mean handing over everything you own. Illinois lets you keep certain property up to specific dollar values, called exemptions, and property within those limits is protected from the bankruptcy trustee and from creditors. Property above the exemption amount is what a trustee can potentially reach. For most people who file, especially those without significant home equity, exemptions cover everything they actually own.
The Homestead Exemption Nearly Tripled
Under 735 ILCS 5/12-901, effective January 1, 2026, the homestead exemption protecting equity in your home rose from $15,000 to $50,000 for an individual. If the home is co-owned, such as by married spouses, the protected equity rises to $100,000 for the property, divided according to each owner's share. This is a real increase, not a rounding change, and it means many homeowners who previously would have had exposed equity are now fully covered.
The Vehicle Exemption Went Up Too
The same legislative update raised the motor vehicle exemption under 735 ILCS 5/12-1001 from $2,400 to $3,600 in equity for one vehicle per person. If your car is worth less than that, or your loan balance is close to what the car is worth, this exemption alone often covers it.
The Wildcard Exemption Covers What Nothing Else Does
Beyond the homestead and vehicle exemptions, Illinois also allows a wildcard exemption, a flexible amount that can be applied to any personal property that is not otherwise protected. This can cover bank account balances, personal belongings, or anything else that does not fall under a named category. It is one of the most useful tools in a Chapter 7 case precisely because it can be pointed at whatever needs the coverage most.
The Means Test Decides If You Qualify At All
Before exemptions even come into play, Chapter 7 has a threshold question: does your income qualify you to file this chapter at all? The means test compares your household income to the Illinois median for a household your size. If you are under the median, you generally qualify for Chapter 7 without further calculation. If you are over it, a more detailed analysis of your income and allowed expenses determines whether Chapter 7 is still available or whether Chapter 13 is the required path instead.
What the Automatic Stay Does the Moment You File
As soon as a Chapter 7 case is filed, the automatic stay takes effect immediately. Creditors have to stop collection calls, lawsuits, wage garnishments, and repossessions. A pending foreclosure or eviction can be paused, at least temporarily, giving breathing room while the case proceeds. This protection is one of the most immediate and tangible benefits of filing, often felt within days.
Two Required Courses Bookend the Case
Federal law requires a credit counseling course from an approved agency in the 180 days before you file, and a separate financial management course after filing, before the court will grant a discharge. Both are usually done online or by phone, and they are a real requirement, not a formality you can skip. Missing the second course is one of the more common reasons a case stalls right before the finish line.
The Meeting of Creditors Is Less Intimidating Than It Sounds
Every Chapter 7 case includes a 341 meeting, named for the Bankruptcy Code section that requires it. It is not a trial and there is no judge. A trustee asks basic questions under oath, confirming your identity, reviewing your paperwork, and asking about your assets, income, and any recent transfers of property. Most meetings take only a few minutes, and creditors themselves rarely show up in person.
What Chapter 7 Does Not Erase
Bankruptcy is powerful, but it does not wipe out everything. Certain debts generally survive a Chapter 7 discharge:
- Most student loans, unless you can show repaying them would be an undue hardship, a difficult standard to meet.
- Recent income taxes and most other tax debt, though older income tax debt can sometimes qualify for discharge under specific conditions.
- Child support and spousal maintenance obligations, which are never discharged.
- Certain fines and debts arising from injury caused by driving under the influence.
Understanding what will not go away is just as important as understanding what will, since it shapes whether Chapter 7 actually solves the problem you are trying to solve.
When Chapter 13 Is the Better Fit
If the goal is saving a home from foreclosure, Chapter 7 is often the wrong tool. It can discharge unsecured debt, but it does not erase mortgage arrears or give you a structured way to catch up. Chapter 13 creates a repayment plan, typically over three to five years, that lets you pay down past due mortgage payments over time while keeping the home, as long as you keep current payments moving forward. For homeowners behind on a mortgage who want to keep the house, Chapter 13 is frequently the more realistic path.
When to Get Help
If you are weighing bankruptcy in Lockport, Joliet, or anywhere in Will County, the exemption numbers above only tell part of the story. What you actually get to keep depends on your specific property and debts. Call Jeff at (815) 838-5297 to talk through your situation.
Related: Bankruptcy · Illinois family law FAQ
Questions People Ask
How much home equity can I protect in an Illinois Chapter 7 bankruptcy?
As of January 1, 2026, the homestead exemption under 735 ILCS 5/12-901 rose from $15,000 to $50,000 for an individual. If the home is co-owned, such as by married spouses, the protected equity rises to $100,000, divided according to each owner's share. Property within these limits is protected from the bankruptcy trustee and creditors, so many homeowners who previously had exposed equity are now fully covered.
What debts does Chapter 7 bankruptcy not erase in Illinois?
Several debts generally survive a Chapter 7 discharge: most student loans unless repaying them would cause undue hardship, recent income taxes and most other tax debt, child support and spousal maintenance obligations which are never discharged, and certain fines and debts from injury caused by driving under the influence. Understanding what will not go away matters as much as understanding what will.
Should I file Chapter 7 or Chapter 13 if I'm behind on my mortgage in Illinois?
If the goal is saving a home from foreclosure, Chapter 7 is often the wrong tool since it can discharge unsecured debt but does not erase mortgage arrears. Chapter 13 creates a repayment plan, typically over three to five years, that lets you pay down past due mortgage payments over time while keeping the home, as long as you keep current payments moving forward. For homeowners behind on a mortgage, Chapter 13 is frequently the more realistic path.
