Myth: I’ll be required to surrender my house and car

In most cases your home and cars are not at risk of mandatory surrender. Even in those rare cases where circumstance might exist that might subject your property to surrender, you will be given an opportunity to either "cash out" the sought after value or "cash out" that value in a Chapter 13 "over-exempt" Plan.

Under the Bankruptcy Code, consistent with the concept of a "fresh start," the equity in one's homestead is exempt from attachment by your creditors and the bankruptcy trustee, so that you can begin your fresh start with a roof over your head. The Code provides a "homestead exemption" applicable to your primary residential home (but not for vacation or investment properties) up to a certain dollar value. In as much as there is a set dollar value for the homestead exemption under federal law, Illinois is an "opt-out" state and provides its own homestead exemption in the amount of $15,000 for an individual and $30,000 for a married couple.

If there is less than $15,000 or $30,000 in equity in your home, that equity is protected from your creditors and the bankruptcy trustee.

If there is more than $15,000 or $30,000 in equity in your home, you may still be able to keep the home by filing an over exempt asset Chapter 13 Bankruptcy Plan.

Similarly, the Code provides an exemption for any equity you may have in a motor vehicle so that, as a part of your fresh start, you can retain reliable transportation and continue to go to and from your place of employment. The motor vehicle exemption in Illinois is $2,400 for an individual, $4,800 for a married couple.