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Asset Protection – What can I Keep?

For people who have moved:
If you moved from another state within the past two years, it’s very important that you tell us. The Bankruptcy Code requires us to look to your former state of residence to determine what exemptions you can use. Lakelaw can determine the exemptions to which you are entitled no matter where you have lived before. So just tell us and we’ll figure it out for you.

Exemption Planning:
If you are thinking of filing a bankruptcy case, particularly under chapter 7, you might think about acquiring assets which are exempt. This can be tricky, particularly if you acquire the exempt assets with assets which are not otherwise exempt. This course of action could result in your losing your discharge in bankruptcy. Lakelaw’s managing member, David P. Leibowitz, has frequently lectured on Asset Protection in Bankruptcy, particularly as it relates to exemption planning. Exemption planning requires a lot of care and attention to be carried off without objection. It’s very important that you disclose all pre-bankruptcy transactions to your Lakelaw attorney in order to avoid highly unpleasant surprises and consequences from your bankruptcy trustee.

Illinois Exemptions

Here are the most important exemptions under Illinois law:

Type of Property Amount of Exemption
Residence or homestead of individual. Includes farm, lot and buildings, condominium, mobile home or cooperative. Can be owned or leased. $15,000
Necessary wearing apparel, bible, school books and family pictures. Prescribed health aids of debtor and dependents. 100%
Any personal property of the debtor $4,000
One motor vehicle $2,400
Implements, professional books, tools of trade $1,500
Proceeds and cash value of life insurance policies and annuity contracts payable to dependent of insured 100%
Public benefits: social security, unemployment compensation, public assistance, veteran’s and disability and illness benefits 100%
Alimony, support or separate maintenance Amount reasonably necessary to support debtor and dependents.
Crime victim’s reparation awards 100%
Wrongful death payments as a result of the death of a person who supported the debtor Amount reasonably necessary to support debtor.
Life insurance payments from a policy insuring a person who supported the debtor Amount reasonably necessary to support debtor and dependents.
Payments on account of bodily injury to the debtor or a person who supported the debtor $15,000
Gross earnings or disposable earnings (i.e., gross earnings less deductions required by law 85% of gross earnings OR disposable earnings equal to 45 times the federal minimum hourly wage per week, whichever is greater (Illinois bankruptcy courts are not in full agreement on this point)
Proceeds and cash value of life or endowment insurance policy or annuity contract payable to insured’s spouse or dependent 100%
Fraternal Benefit Society’s benefits 100%
Workmen’s compensation benefits 100%
Public welfare benefits 100%
Property held in trust for the debtor 100%
Unemployment compensation benefits 100% (support claims excepted)
Retirement funds (tax qualified plans or plans in good faith established as tax qualified plans) 100%

Wisconsin Exemptions – State Law

These are the most important exemptions under Wisconsin law:

Type of Property Amount of Exemption
Homestead $75,000 or the proceeds of sale for up to two years if you plan to buy another house
Insurance Federal disability insurance benefits.Fraternal benefit society benefits.Life insurance proceeds for someone debtor depended on, needed for support.Unmatured life insurance contract (except credit insurance contract) if debtor owns contract & insured is debtor or dependent, or someone upon whom debtor is dependent.

Unmatured life insurance contract’s accrued dividends, interest, or loan value to $4,000 total, if debtor owns contract & insured is debtor or dependent, or someone debtor is dependent on.

Family law related assets Alimony, child support needed for support
Pensions, retirement benefits Some municipal employees.Firefighters, police officers who worked in city with population over 100,000.Military pensionsPrivate or public retirement or disability benefits, including IRAs and KEOGHs, 401(k), subject to many exceptions & limitations. (don’t worry – most IRAs, 401(k) plans, 403(b) plans and similar plans are excluded from bankruptcy estates under the Bankruptcy Code.)

Public employees

Personal Property Burial plot, tombstone, coffin (husband & wife may double).College savings account or tuition trust fund.Fire & casualty proceeds for destroyed exempt property for 2 years from receiving.Lost future earnings recoveries, needed for support.

Tenant’s lease or stock interest in housing co-op, to homestead amount.

Wages used to purchase savings bonds.

Wrongful death recoveries, needed for support.

Household goods and furnishings, clothing, keepsakes, jewelry, appliances, books, musical instruments, firearms, sporting goods, animals, and other tangible personal property to $12,000 total (husband & wife may double).

Motor vehicles to $4,000 (husband & wife may double; unused portion of $12,000 personal property exemption may be added).

Personal injury recoveries to $50,000.

Deposit accounts to $5,000.

Public Benefit Crime victims’ compensation needed for support.Social services payments.Unemployment compensation.Veterans’ benefits under 45.03(8)(b).

Workers’ compensation.

Wages 75% of weekly net income or 30 times the greater of the federal or state minimum hourly wage; bankruptcy judge may authorize more for low-income debtors.Wages of county jail prisonersWages of county work camp prisonersWages of inmates under work-release plan.

Wisconsin Exemptions – Federal Law

If you live in Wisconsin, you also have the right to use Federal Exemptions. Here’s a list of the most important federal bankruptcy exemptions:

Type of Property Exemption
Homestead $15,000 (adjusted)
Motor Vehicle $2,400 (adjusted)
Household Furnishings, household goods, wearing apparel, appliances, books, animals, crops, musical instruments held primarily for the personal, family or household use of the debtor or a dependent of the debtor $400 per item not to exceed $8,000 in aggregate value – also can utilize any portion of the homestead exemption not utilized by the debtor to protect his or her homestead.
Jewelry held for personal, family or household use of the debtor or a dependent of the debtor $1,000 (adjusted)
Implements, professional books or tools of trade $1,500 (adjusted)
Insurance cash surrender or loan value $8,000 (adjusted)
Benefits including social security benefits, unemployment compensation, local public assistance benefit; veterans benefit; disability, illness or employment benefit; alimony support or separate maintenance to the extent reasonably necessary for the support of debtor or debtor’s dependents; stock bonus, pension, profitsharing, annuity or similar plan or contract on account of illness, disability, death, age or length of service (except for certain non-qualified insider plans) 100%
Rights to recover certain payments including: Crime victim’s reparations, wrongful death payments, life insurance contracts of persons of whom debtor was a dependent 100%
Personal injury claims $15,000 (adjusted)
Payment for loss of future earnings of the debtor or an individual of whom debtor is dependent 100% to extent reasonably necessary for support of debtor or any dependent of the debtor
Retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under the Internal Revenue Code. 100%