Creditors seeking to execute on debtors’ assets to collect on judgments face legal limits under Illinois law, which lets a debtor claim certain types of property as exempt from enforcement of a judgment, wage deduction order or other collection measure. A creditor’s attorney must conduct a thorough examination of a judgment debtor’s assets to determine which assets are available in whole or in part as sources of payment of the amount due.
The satisfaction of judgment process begins by serving a citation to discover assets, which requires the debtor to fill out an Income and Asset Form detailing their revenue sources and the money and property in their possession. The debtor can then appear in court and claim certain assets as exempt. These are the major exemptions under Illinois law:
- Wages (exempt in part) — 85 percent of an individual debtor’s wages are exempt. Creditors may seek satisfaction of a debt from the remaining 15 percent. This wage exemption is automatic, so the debtor need not assert it.
- Certain retirement funds — Pension and individual retirement account (IRA) funds and individual retirement annuities are fully exempt from collections.
- Certain real property (exempt in part) — A debtor may exempt up to $15,000 in equity on their individually owned residence or farmland. The exemption doubles to $30,000 if the eligible property is jointly owned.
- Motor vehicle (exempt in part) — A debtor may exempt up to $2,400 in equity in a single motor vehicle.
- Life Insurance and annuities — Certain insurance benefits, endowments, annuities and disability payments are exempt if the debtor’s spouse is the loss payee, or if the loss payee is a non-spouse dependent upon the debtor.
- Wild card exemption — A debtor may exempt up to $4,000 in value on any type of property owned.
A creditor may challenge the validity of an exemption that appears questionable and to obtain court orders to compel the debtor to deliver up any nonexempt assets. An experienced debtor and creditor attorney can be invaluable in helping creditors enforce their rights.
Creditors and collection agents must also navigate a multitude of federal laws governing debt collections. Creditors must comply with the U.S. Bankruptcy Code and the Fair Debt Collection Practices Act, which restricts debt collectors’ actions to enforce consumer debts. Non-compliance with applicable laws can expose the creditor and/or its agents to sanctions and other potential liability.
Located in Chicago, Schwartz & Kanyock, LLC is a full-service Illinois commercial litigation and debtor and creditor law firm. Our attorneys are highly experienced in every aspect of debt collection and asset seizure practices. If you have a judgment you need to enforce, please contact us online or call 312-436-1442 for an initial consultation.
