How to File Chapter 7 Bankruptcy in Illinois

To file Chapter 7 bankruptcy in Illinois, you complete an approved credit counseling course, confirm your income is low enough to pass the means test, prepare a petition with full financial schedules, pay a $338 court fee in the federal district where you live, attend a virtual meeting with the trustee, and finish a second financial management course after filing. If everything is in order, the discharge order typically arrives about 60 days after the creditors meeting.

Illinois rewrote its exemption rules effective January 1, 2026, so filers now keep more of their home equity, vehicle, and personal property than under the old caps. The steps below walk through the process in the order you’ll actually do them.

Step 1: Confirm You Pass the Means Test

The means test is the main gatekeeper for Chapter 7. It averages your income over the six full calendar months before filing and compares that figure to the median income for an Illinois household of your size.¹

For cases filed on or after April 1, 2026, the Illinois median thresholds are:

One earner: $73,180
Two-person household: $93,934
Four-person household: $137,902

Each person beyond four adds $11,100.² The Department of Justice updates these numbers about every six months.³

Below the median, you pass and generally proceed with Chapter 7. Above it, you move to a second calculation that subtracts allowed living expenses from your monthly income; if what’s left could repay a meaningful portion of your unsecured debts, the court will presume the filing is abusive and push you toward Chapter 13 or dismiss the case.¹

If you’re married and filing alone, your spouse’s income still counts for the initial median comparison. A “marital adjustment” lets you subtract portions of that income that go to your spouse’s own separate expenses, such as their paycheck deductions, student loans in their name only, or support obligations to another household. Ordinary shared household bills do not qualify. For a solo filer with a working spouse, getting this adjustment right often decides whether the case passes.

Step 2: Take the Pre-Filing Credit Counseling Course

You must complete a credit counseling session with a nonprofit agency approved by the U.S. Trustee’s office before you can file.⁴ It’s done by phone or online, usually in under an hour, and produces a certificate valid for 180 days. That certificate must be filed with your petition. The Department of Justice publishes the list of approved agencies for Illinois.⁵

Step 3: Figure Out What You Can Keep

Illinois opted out of the federal exemption system, so you rely on state exemptions to protect your property.⁶ You must have lived in Illinois for at least 730 days before filing to use them. Recent arrivals may need to apply the exemptions of their prior state.

Homestead

An individual can protect up to $50,000 of equity in a primary residence, including a house, condo, or cooperative unit. Co-owners share a combined cap of $100,000, split by ownership share.⁷ Stay inside those limits and the trustee cannot force a sale.

Personal Property

Under 735 ILCS 5/12-1001, Illinois protects:

Up to $3,600 of equity in one motor vehicle.
A $4,000 wildcard that can cover cash, bank accounts, or any property that doesn’t fit another category. In consumer debt cases, $1,000 of that wildcard applies automatically to checking, savings, or credit union accounts.
Up to $2,250 in tools of the trade, including work tools and professional books.
Necessary clothing, bibles, school books, and family pictures, with no dollar limit.

These amounts apply per debtor.⁸

Benefits and Retirement

Social Security, veterans’, disability, and unemployment benefits and public assistance are exempt to the extent reasonably necessary for your support.⁸ IRAs, 401(k) plans, pensions, and profit-sharing plans receive broad protection as long as the plan was set up in good faith to qualify under the Internal Revenue Code.⁹

Watch Your Tax Refund

Any tax refund you’re owed for a year before filing is property of the bankruptcy estate, and the trustee can request that the IRS redirect it.¹⁰ You can shield part or all of a pending refund with the wildcard, but filing early in the year when a large refund is sitting out there means more exposure. Timing matters here.

Step 4: Prepare the Petition and Schedules

The main form is the Voluntary Petition for Individuals, Official Form 101. It travels with a set of schedules that together lay out your full financial picture:

Schedule A/B lists every piece of property you own.
Schedule C identifies the Illinois exemptions you’re claiming on each item.
Schedules D and E/F list every secured, priority, and unsecured creditor with address and amount owed.
Schedules I and J show your current monthly income and expenses.

Everything is signed under penalty of perjury. Leaving a creditor off the schedules can prevent that specific debt from being discharged if the creditor doesn’t learn of the case in time, so thoroughness is worth the extra hour.

You also need to assemble supporting records:

All pay stubs or payment evidence received within 60 days before filing.¹¹
Your most recent federal tax return, which must reach the trustee at least seven days before the creditors meeting.¹¹
Six full months of income records to feed the means test calculation.

Step 5: File in the Right District and Pay the Fee

Illinois has three federal judicial districts: Northern, Central, and Southern. You file in the district where you’ve lived for the greater part of the 180 days before filing.

The total filing fee is $338, made up of a $245 base fee, a $78 administrative fee, and a $15 trustee payment.¹²¹³ If paying the fee would be a hardship, you can apply for a waiver with Form 103B.¹⁴ Attorney fees for a straightforward Illinois Chapter 7 typically run $1,000 to $2,000 or more, depending on complexity and location.

The moment the petition is filed, the automatic stay kicks in. Creditors must stop all collection activity, including phone calls, lawsuits, wage garnishments, and bank levies.¹⁵ A creditor who violates the stay can face sanctions. Certain actions, such as child support enforcement and criminal proceedings, are not covered.

Step 6: Attend the 341 Meeting of Creditors

Between 21 and 40 days after filing, you attend the 341 meeting.¹⁶ The bankruptcy trustee runs it, not a judge, and almost all consumer meetings are now held virtually on Zoom.¹⁷ Despite the name, creditors rarely appear in routine consumer cases. The trustee puts you under oath and asks about your property, debts, income, and whether the paperwork is accurate. Most meetings last 10 to 15 minutes when the schedules are complete and consistent.

Step 7: Complete the Debtor Education Course

A second, separate course, the personal financial management course, must be completed after filing. You file Official Form 423 to certify completion within 60 days after the first date set for the 341 meeting.¹⁸ Skip this step and the court will not enter your discharge. In joint cases, both spouses must complete it separately. Waivers exist for incapacity, physical disability, or active duty in a combat zone, but require a court order.

Step 8: Decide What to Do About Secured Property

Chapter 7 wipes out your personal liability on debts, but liens on secured property such as a financed car or furniture survive. If you want to keep the collateral, you generally have two tools.

A reaffirmation agreement is a voluntary deal to stay personally liable on a debt that would otherwise be discharged, most often a car loan. You keep the vehicle and keep paying as before, and if you later default the creditor can repossess and still pursue you for any deficiency. The agreement must be signed before the discharge order enters, and the court may hold a hearing to confirm the deal doesn’t impose undue hardship.

Redemption lets you keep tangible personal property by paying the creditor the item’s current fair market value in a single lump sum, no matter what the loan balance is.¹⁹ If your car is worth $6,000 but you owe $12,000, you pay $6,000 and own it outright. The challenge is the lump sum. Some specialty lenders offer redemption financing, usually at high rates. Redemption applies only to personal-use tangible property, not real estate.

Debts Chapter 7 Will Not Wipe Out

Before you file, know which debts survive the process no matter what:

Child support and alimony.
Student loans and scholarship overpayments, unless you prove “undue hardship” in a separate court proceeding, which is a notoriously difficult standard.
Recent income tax debts, unless the return was due more than three years before filing and wasn’t filed late.²⁰
Debts incurred through fraud or false pretenses, including lying on a credit application.
Debts for death or personal injury caused by driving under the influence.
Criminal fines and most government penalties.
Debts you failed to list, if the creditor didn’t learn of the case in time to file a claim.

²¹

After the Discharge

The discharge order typically arrives about 60 days after the first scheduled 341 meeting date, assuming no objections and all requirements met. Most consumer Chapter 7 cases are “no-asset” cases, meaning the trustee finds nothing to liquidate for creditors.

A Chapter 7 filing stays on your credit report for up to 10 years from the filing date.²² Credit is more expensive in the near term, but many filers see scores improve within a year or two as the discharged debt load falls off their debt-to-income picture.

Debt discharged in Chapter 7 is not treated as taxable income, which is a meaningful difference from debt forgiveness outside bankruptcy.²³

One timing rule to keep in mind for the future: you cannot receive another Chapter 7 discharge if you filed a previous Chapter 7 within the eight years before your new filing date.²⁴ The clock runs filing date to filing date. If a new crisis hits inside that window, Chapter 13 may be your only bankruptcy option.

1
Office of the Law Revision Counsel. 11 US Code 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
2
United States Department of Justice. Census Bureau Median Family Income By Family Size
3
United States Department of Justice. Means Testing
4
Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor
5
United States Department of Justice. Credit Counseling Agencies – Illinois
6
Illinois General Assembly. Illinois Code 735 ILCS 5/12-1201
7
Illinois General Assembly. Illinois Code 735 ILCS 5/12-901 – Amount
8
Illinois General Assembly. Illinois Code 735 ILCS 5/12-1001 – Personal Property Exempt
9
Illinois General Assembly. Illinois Code 735 ILCS 5/12-1006 – Exemption for Retirement Plans
10
Internal Revenue Service. Bankruptcy Frequently Asked Questions
11
Office of the Law Revision Counsel. 11 USC 521 – Debtor Duties
12
Office of the Law Revision Counsel. 28 US Code 1930 – Bankruptcy Fees
13
United States Courts. Bankruptcy Court Miscellaneous Fee Schedule
14
Legal Information Institute. Federal Rules of Bankruptcy Procedure Rule 1006 – Filing Fee
15
Office of the Law Revision Counsel. 11 US Code 362 – Automatic Stay
16
Legal Information Institute. Federal Rules of Bankruptcy Procedure Rule 2003 – Meeting of Creditors or Equity Security Holders
17
United States Department of Justice. Section 341 Meeting of Creditors
18
United States Courts. Official Form 423 – Certification About a Financial Management Course
19
Office of the Law Revision Counsel. 11 US Code 722 – Redemption
20
Internal Revenue Service. Declaring Bankruptcy
21
Office of the Law Revision Counsel. 11 US Code 523 – Exceptions to Discharge
22
Office of the Law Revision Counsel. 15 USC 1681c – Requirements Relating to Information Contained in Consumer Reports
23
Internal Revenue Service. Bankruptcy Tax Guide – Publication 908
24
Office of the Law Revision Counsel. 11 USC 727 – Discharge