Exemptions that Preserve Money or Property

Prairie State Legal Services			Page Updated: May 25, 2006
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When You Owe Money Section 6 - Exemptions Which Prevent Creditors from Taking Your Money or Property		IMPORTANT NOTICE This information is not meant to be legal advice or to replace the advice you should receive from an attorney. There are times when it would be wise to consult a lawyer and other times when it is essential to do so. Always remember, each individual case is unique. This information applies to general consumer situations and should help you to avoid many problems before they happen. If you have additional questions or want legal advice, follow this link to find the Prairie State office nearest you.
SECTION CONTENTS Content Updated: January 2006
Exemptions - Prevent Creditors From Taking Your Money or Property What Are Your Exemption Rights?	Putting Money From an Exempt Source in the Bank How to Claim Your Exemption Rights
Exemptions Which Prevent Creditors From Taking Your Money or Property In Illinois, the law protects some of your income and property from collection by creditors. No one can force you to pay debts from money or property which is exempt. The idea behind the exemption laws is to allow consumers to keep the basic necessities of life. This section will tell you which money and property can't be taken by creditors. These exemptions give consumers very important rights, particularly after a court judgment where the creditor seeks an order to seize a consumer's property. A creditor cannot make you give up your exemption rights, such as by putting some small print in a contract. Such clauses are illegal under federal law. But exemption laws do not protect you when a creditor wants to repossess an item of your property in which the creditor has a security interest, often known as collateral. For example, if the consumer puts up a car as collateral on a loan, the creditor can take the car if the consumer gets behind in payments, even if the car is an exempt asset. [For more information about this, see Prairie State Legal Services' pamphlet on Repossession.]
What Are Your Exemption Rights? Back Some of your exemption rights have already been discussed in this booklet. The amount of your wages which are exempt are discussed in the section above on Wage Deductions. The value of your homestead exemption is discussed in the earlier section of this booklet called Judgment Liens and Enforcement of the Judgment Against Real Estate. This section will focus on your rights to exemption of personal property other than wages. When we say exemption, we are referring to property which the law says you can stop creditors from taking. As a consumer, your following personal property is exempt from collection or attachment: Your or your family's clothing, Bible, school books and family pictures. Up to $4,000 in value of any other property of your choice. This informally is known as the WILD CARD exemption because you can identify one or more items of property for which you want the exemption applied. For example, if a creditor tries to garnish your bank account which has $500 in it, you can claim the entire account as coming within your wild card exemption. That means you are left with another $3,500 to exempt other personal property. Also, only your equity interest in the property is counted towards the $4,000 limit. Let's say you want to apply the wildcard exemption to one of your cars that's worth $5,000. If you still owe the bank $4,000 on the car, your equity interest is only $1,000. Since your equity interest is less than the amount of the wildcard exemption, you can use the wild card to totally exempt your car. You can use the $4,000 wildcard to add exemption value to other exemptions shown below. Your interest in any one motor vehicle, up to $2,400. Let's say you want to use your exemption rights to protect your car from being taken by a judgment creditor, but your equity interest in the car is $3,000. You can claim up to $2,400 of it under this exemption. Is the car totally exempt? Yes, if the $600 difference is claimed as an exemption under your wild card. Any implements, professional books or tools of your trade, up to $1,500 in value. Again, only your equity interest in this property is counted towards the $1,500 limit. Your right to receive certain types of government benefits or assistance. This exemption covers government benefits such as Social Security, unemployment compensation, public aid, veteran's benefits, and other forms of public assistance. Your right to receive circuit breaker property tax relief benefits is also exempt. Any disability, illness or unemployment benefit from an employer, an insurance company or any other source, including workmen's compensation benefits. Your right to receive alimony, maintenance or support payments. This includes payments for your support or the support of any dependent. Your right and interest in a retirement plan, such as a pension or annuity. Various other forms of property are exempt under the law, including: Life insurance benefits payable to you as a result of someone's death; Payments of money for the wrongful death of a person who supported you; Payments of money due to a personal bodily injury which you sustained [up to $15,000]; An award under the crime victim's compensation law; Money due you from the sale of any of your property which was exempt at time of sale. In addition to the above list of exemptions, there may be other exemptions to which you are entitled under the law.		Go To Top of Page Exemptions - Prevent Creditors From Taking Your Money or Property What Are Your Exemption Rights? Putting Money From an Exempt Source in the Bank How to Claim Your Exemption Rights
Putting Money From an Exempt Source in the Bank Back If money from an exempt source [such as Social Security] is deposited into a bank account, it remains exempt. However, to protect the money in the account, you must be able to show that the funds in the account are all exempt. If both exempt and non-exempt funds are in the account, it becomes very difficult to protect the account from garnishment. Therefore, if you keep your money in a bank, keep your money from the exempt source in a separate account. Do not deposit non-exempt funds into that account. If a creditor attempts to garnish money from that account, follow the instructions in the section about What You Should Do If Your Bank [Or Other Garnishee] Has Frozen Your Account.		Go To Top of Page Exemptions - Prevent Creditors From Taking Your Money or Property What Are Your Exemption Rights? Putting Money From an Exempt Source in the Bank How to Claim Your Exemption Rights
How to Claim Your Exemption Rights Back As discussed above, the creditor may try to enforce a judgment using collection procedures such as the Citation To Discover Assets or the garnishment process. When that happens, you should talk to a lawyer. However, if you see that the creditor is trying to collect exempt money or property from you, it may be up to you to go to court to assert your exemption rights. As we discussed in the section about Creditors' Methods to Collect Court Judgments, the notices you receive will tell you your exemption rights and how you can get a court hearing. If you do not get the notices from the creditor, you should try to obtain them from the creditor's attorney or from the court. In general, to obtain a hearing on your exemption rights, you should notify the Clerk of the Circuit Court in writing before the court date shown on the citation or the garnishment. The Clerk will give you a date and time to appear before a particular judge. The Clerk will also give you the necessary forms which you must prepare and send to the creditor and to any garnishee, regarding the time and location of the hearing. [The garnishee is the person, bank or employer holding the property which the creditor is trying to get]. If you prefer, you can also get a hearing by appearing in court on the return date. Sometimes it is to your advantage to get the hearing sooner, particularly if your bank account is frozen or your wages are being deducted. When you appear at the hearing, you should be prepared to identify for the judge the particular property you believe is exempt. You should also be prepared to tell the judge the reason why you believe the property is exempt. In the case of a wage deduction, use the formula discussed above in the section on Wage Deductions to determine the maximum amount of your wages that can be deducted. You should put your calculations in writing in a way the judge can understand. In the case of a non-wage garnishment, identify which funds held by the garnishee are exempt and the reason. If you have disclosed certain income or assets to the creditor on a Citation to Discover Assets, you should tell the creditor [or his or her lawyer] what of those items are exempt and which of those items you select under your wildcard exemption. Do not allow the creditor or the creditor's attorney to present a turn-over order to the judge before you have had an opportunity to review that order. Tell the judge if it appears that the language on the order seems to turn-over property which you have identified as exempt.		Go To Top of Page Exemptions - Prevent Creditors From Taking Your Money or Property What Are Your Exemption Rights? Putting Money From an Exempt Source in the Bank How to Claim Your Exemption Rights
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