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Use Illinois Exemptions to Protect Against Judgments and Citations to Discover Assets in Illinois

Posted on Feb 17, 2014 in Exemptions

Gavel2Our client needs to file for bankruptcy but can’t file her case until August.  Why?  She wants to discharge income taxes and must wait until they have been due long enough. In the meantime, creditors were suing her and getting judgments.

Once a creditor in Illinois gets a judgment against you, it can take steps to collect the judgment.  Most frequently creditors will try to collect their judgment by using a citation to discover assets.  The creditor can direct the citation to discover assets to the debtor or to anybody else who the creditor thinks might have assets belonging to the debtor – like a bank or an employer for example.

Most people facing judgments in Illinois don’t know that they can protect themselves with the same exemptions which they might use in bankruptcy. Sure, we can file a bankruptcy case to protect against a judgment. But not everyone can file a bankruptcy and it could be a problem for someone to file a bankruptcy right away.  Maybe it’s been less than 8 years since a prior bankruptcy.  And maybe we need to wait to let an important deadline pass.  There’s a 3 year waiting period from the last day to file a tax return for discharge of certain taxes.  There’s a 4 year waiting period from certain transfers which could be avoided as fraudulent transfers.  There’s a 1 year waiting period from payments of debts to friends family or relatives.

In the meantime, we can claim exemptions for a judgment debtor to prevent a creditor from taking assets.  What did we protect for our client this week?

  • We protected $2400 equity in her car using the automobile exemption
  • We protected another $4000 equity in her car using the wild-card exemption
  • We protected 85% of her wages using the wage exemption
  • We protected 100% of the cash surrender value of her life insurance because it was for the benefit of her children
  • We protected 100% of the money in her children’s bank accounts for which she was custodian because this was proceeds of social security, a public benefit.
  • We protected 100% of the money in her IRA because this is fully exempt under Illinois law.

These are just a few of the important assets which creditors can’t touch if they have a judgment against you. Click here for additional information about exemptions in Illinois and Wisconsin. 

While our client will certainly have some challenges from now until the time that it is optimal for her to file her bankruptcy case, we at Lakelaw will continue to protect her outside of bankruptcy until we can get complete relief for her in bankruptcy.

If you are facing judgments but can’t file bankruptcy today, call David Leibowitz at Lakelaw today at 847 249 9100.  We can intervene today to help you solve your immediate problems while we develop a lasting and permanent solution to your financial distress.

 

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