Illinois protects up to $50,000 of home equity per owner ($100,000 for a married couple who both own the home) — an amount increased under Illinois law effective January 1, 2026. If your equity is within that limit and your mortgage is current, you generally keep your house. You continue paying the mortgage as usual — bankruptcy discharges other debt, which can free up money to stay current.
Illinois protects up to $3,600 of equity in one vehicle, and a separate $4,000 per-person wildcard exemption can be applied to a car or other property. If you owe about what the car is worth, there is little or no non-exempt equity, so you can usually keep it — as long as you keep making the loan payment (you may “reaffirm” the auto loan).
Assets are only at risk if you have equity beyond what the exemptions cover. For example, a paid-off luxury car or a home with large equity could expose some value to the trustee. Even then, options exist — and Chapter 13 generally lets you keep your property while repaying a portion of your debt over time.
Whether you keep a specific asset depends on its value, what you owe, and how the exemptions apply. Attorney Alex Ranjha reviews your assets and explains what is protected before you file, so you know what to expect.
Usually not. If your car loan is current and your equity fits within Illinois exemptions, you keep the car and keep paying the loan. Cars are typically only at risk if they are paid off and worth well above the exemption amount.
Chapter 7 does not eliminate a mortgage on a home you want to keep. You continue making payments, and discharging your other debts often makes those payments easier to afford. If you are behind, Chapter 13 may be the better tool.
If your equity exceeds the Illinois homestead exemption, Chapter 7 could put some of that value at risk. In that situation, Chapter 13 usually lets you protect the home while repaying creditors a portion over three to five years.
Attorney Alex Ranjha (JD/MBA) offers a free, confidential consultation. Flexible payment plans. Se Habla Español.
