If you have a judgment or a lien against you in Illinois, you might find use in the homestead exemption. The homestead exemption protects you from creditors by allowing you to keep a certain amount of your property safe from seizure. The homestead exemption also applies to bankruptcy cases. Depending on the nature of the judgment or lien against you, the Illinois homestead exemption might provide some relief.
Homestead Exemption
A homestead exemption is a legal protection that prevents creditors from seizing a home with a value up to the limit of the exemption. Each state is responsible for determining how large of a homestead exemption it will grant to its residents. In Illinois, homes are protected up to a value of $15,000 from creditors. This applies to creditors who have legal cause to pursue debts via a judgment or a lien, as well as those party to an Illinois bankruptcy case.
Judgment
If you are the subject of a judgment in Illinois, it means that one of your creditors has sued you in court to collect money you owe. If the court rules in favor of your creditor, a judgment against you authorizes the creditor to collect in a number of legal means, including the garnishment of your wages and the possible seizure of your property. The Illinois homestead exemption protects your home against seizure by creditors with a judgment.
Lien
A lien is another legal action that may come out of a creditor lawsuit against you. A lien attaches to your property and prevents you from selling it without first paying off what you owe. As with judgments, however, the Illinois homestead exemption protects the first $15,000 in net equity you hold in your personal home. Only amounts above this level can be used to satisfy any liens against your home. If you are underwater on your home, or if your home has little net equity, even creditors with a lien cannot collect from you on that property.
Bankruptcy
The Illinois homestead exemption also plays a role in Illinois bankruptcy cases. In a Chapter 7 bankruptcy filed in Illinois, you can only protect up to $15,000 of home equity from liquidation by the bankruptcy trustee. If your home is worth more, the trustee will most likely require a payment from you in the amount of the excess equity or sell the property outright to pay your creditors. If your Illinois bankruptcy is a Chapter 13, the homestead exemption is irrelevant, as you can keep all of your property anyway.
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