Bankruptcy in Illinois (2026): Exemptions & Means Test

Bankruptcy is a federal process, but the property you can keep and the income test you must pass 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 who do not pass the Chapter 7 means test. 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 the right choice for everyone, so consider consulting a licensed Illinois bankruptcy attorney about your specific situation.