Illinois Considers Raising Homestead Exemption to $150K

 Posted on February 24, 2019 in Debt Collection

Illinois lawmakers have once again introduced legislation that would change creditor’s debt collection practices. A similar bill from last year failed to make it out of committee, but lawmakers have outlined several goals that they believe will protect debtors:

• Requiring all court summons for a debt collection lawsuit to include a debtor’s “bill of rights”;
• Reducing the time in which a creditor can revive a judgment against a debtor to five years;
• Lowering the annual interest rate on debt judgments less than $25,000 to two percent; and
• Raising the value of the exemptions that debtors can use to protect their assets from creditors.

The proposed change to the homestead exemption stands out because of the sizeable jump. The exemption would increase from $15,000 to $150,000 for an individual homeowner and $30,000 to $200,000 for a couple.

Homestead Exemption

A home is often the most valuable property that a person owns, which makes it important to debtors and creditors. Creditors could recover a large portion of the debt by forcing the debtor to sell the property, but the debtor wants to protect the equity he or she has in the property. Illinois’ homestead exemption allows a debtor to prevent creditors from selling a property as long as the debtor’s equity interest is below $15,000. The equity interest is calculated by subtracting what the debtor owes on the mortgage from the value of the property. Raising the homestead exemption would make it more difficult for creditors to sell a debtor’s home after a judgment lien.

State Comparison

Each state has its own homestead exemption law with different exemption levels. Seven states and the District of Columbia have an unlimited exemption, while New Jersey has no exemption. Of the remaining 42 states, six states have exemptions of $15,000 or less, including Illinois. If Illinois increases its homestead exemption to $150,000, it would have one of the 15 highest exemptions, including the states with unlimited exemptions.

Contact a Chicago Debt Collection Attorney

Debtors have other exemptions that they can use for one motor vehicle, tools of their trade, and miscellaneous properties. Exempting properties can affect whether you are able to recover the full value of the debt owed to you. A Chicago debt collection lawyer at Dimand Walinski Law Offices, P.C., knows how to hold a debtor accountable and enforce court judgments. Schedule a consultation by calling 312-704-0771.

Source:

http://www.ilga.gov/legislation/fulltext.asp?DocName=&SessionId=108&GA=101&DocTypeId=HB&DocNum=281&GAID=15&LegID=114404&SpecSess=&Session=