At Bankruptcy Law Chicago, we are keeping you up to date on all of the important developments that can help you. I am attorney Daniel J. Winter, and, with 30-plus years of experience, I can help you manage your financial problems. We give you “Peace of Mind”.
If you’re an Illinois resident considering Chapter 7 bankruptcy, 2026 could be your best year to file. Why? Because Illinois is finally updating its outdated exemption laws, giving homeowners and families more protection than ever before. Here’s what you need to know.
Why This Matters
Exemptions determine what property you can keep when filing bankruptcy. For years, Illinois exemptions were so low that many homeowners couldn’t qualify for Chapter 7 without risking their home. Starting January 1, 2026, that changes in a big way.
New Illinois Exemption Amounts (Effective Jan 1, 2026)
- Homestead Exemption:
- Old: $15,000 per person
- New: $50,000 per person ($100,000 joint)
This is a game-changer for homeowners with equity.
- Motor Vehicle:
- Old: $2,400
- New: $3,600
- Tools of the Trade:
- Old: $1,500
- New: $2,250
- Wildcard:
- Still $4,000 per person ($8,000 joint)
- New Household Goods Exemption:
- Up to $5,000 for furniture, appliances, clothing, electronics, and even pets.
(Source: Illinois Public Act 104-0120)
What Does This Mean for You?
- More homeowners qualify for Chapter 7. With the homestead exemption jumping to $50,000 per person, many families can protect their home equity.
- Better protection from creditors. These exemptions apply outside bankruptcy too, shielding assets from judgment creditors.
- Timing matters. Filing before January 1, 2026 means you’re stuck with the old limits. Waiting could save your home or car.
Illinois Is an Opt-Out State
You must use Illinois exemptions—not federal ones—if you’ve lived in the state for at least two years. That means these new amounts will apply to your case starting in 2026.
Final Thoughts
If you’re struggling with debt and considering bankruptcy, now is the time to plan. Talk to a qualified Illinois bankruptcy attorney about whether waiting until 2026 makes sense for you.
Ready to explore your options? Contact BankruptcyLawChicago.com, to discuss how the 2026 exemption changes could impact your case. We offer in-person and virtual consultations to help you with our individual, compassionate help.
Daniel J. Winter
312-789-9999
