Changes in Illinois law have increased the Illinois bankruptcy exemptions for 2026. Why is this good News? It is good news because the higher bankruptcy exemptions will allow more people can file bankruptcy without the fear of having to sell their home or vehicles.
For instance, if one has $150,000 of equity in their home and they filed bankruptcy, they will have to pay their unsecured creditors (credit cards) the lesser of 100% of what was owed or the $150,000. If the bankruptcy filer didn’t have the $150,000 in liquid cash, the trustee would sell the home to pay the creditors. This is why many businesses and individuals choose not to file for bankruptcy and miss out on the fresh start bankruptcy provides.
With these new, higher Illinois bankruptcy exemptions, filing for bankruptcy becomes a viable solution for more individuals, families, and businesses.
Here are the new exemptions for joint bankruptcy filers in 2026:
| 2025 or before | 2026 and after | |
|---|---|---|
| Homestead exemption | $15,000 | $50,000 |
| Automobile | $2,400 | $3,600 |
| Tools of the Trade | $1,500 | $2,250 |
| Personal Injury Award | $15,000 | $22,500 |
| Household Goods | $0 | $5,000 |
With the new Illinois bankruptcy exemptions, more consumers have the opportunity for a bankruptcy fresh start without having to surrender their assets.