Full Text of SB0497 95th General Assembly
SB0497 95TH GENERAL ASSEMBLY
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95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008 SB0497
Introduced 2/8/2007, by Sen. John J. Cullerton SYNOPSIS AS INTRODUCED: |
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15 ILCS 505/16.5 |
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735 ILCS 5/12-1001 |
from Ch. 110, par. 12-1001 |
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Amends the State Treasurer Act to provide that moneys held in an account invested in the Illinois College Savings Pool shall be exempt from all claims of the creditors of the participant, donor, or designated beneficiary of that account, except for non-exempt College Savings Pool transfers to or from the account. Defines "participant" and "donor". Amends the Code of Civil Procedure. Provides that moneys held in an account invested in the Illinois College Savings Pool of which the debtor is a participant or donor is personal property that is exempt from judgment, attachment, or distress from rent except for: (i) contributions to the account made with the intent to hinder, delay, or defraud any creditor, (ii) certain contributions to the account made during the 365 day period prior to the date of the debtor filing for bankruptcy in excess of the annual gift tax exclusion; or (iii) certain contributions to the account made during the the 730 to 366 day period prior to the date of the debtor filing for bankruptcy in excess of the annual gift tax exclusion.
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A BILL FOR
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SB0497 |
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| AN ACT concerning civil procedure.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The State Treasurer Act is amended by changing | 5 |
| Section 16.5 as follows:
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| (15 ILCS 505/16.5)
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| Sec. 16.5. College Savings Pool. The State Treasurer may | 8 |
| establish and
administer a College Savings Pool to supplement | 9 |
| and enhance the investment
opportunities otherwise available | 10 |
| to persons seeking to finance the costs of
higher education. | 11 |
| The State Treasurer, in administering the College Savings
Pool, | 12 |
| may receive moneys paid into the pool by a participant and may | 13 |
| serve as
the fiscal agent of that participant for the purpose | 14 |
| of holding and investing
those moneys.
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| "Participant", as used in this Section, means any person | 16 |
| who has authority to withdraw funds, change the designated | 17 |
| beneficiary, or otherwise exercise control over an account. | 18 |
| "Donor", as used in this Section, means any person who makes
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| investments in the pool. "Designated beneficiary", as used in | 20 |
| this Section,
means any person on whose behalf an account is | 21 |
| established in the College
Savings Pool by a participant. Both | 22 |
| in-state and out-of-state persons may be
participants , donors, | 23 |
| and designated beneficiaries in the College Savings Pool.
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| New accounts in the College Savings Pool shall be processed | 2 |
| through
participating financial institutions. "Participating | 3 |
| financial institution",
as used in this Section, means any | 4 |
| financial institution insured by the Federal
Deposit Insurance | 5 |
| Corporation and lawfully doing business in the State of
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| Illinois and any credit union approved by the State Treasurer | 7 |
| and lawfully
doing business in the State of Illinois that | 8 |
| agrees to process new accounts in
the College Savings Pool. | 9 |
| Participating financial institutions may charge a
processing | 10 |
| fee to participants to open an account in the pool that shall | 11 |
| not
exceed $30 until the year 2001. Beginning in 2001 and every | 12 |
| year thereafter,
the maximum fee limit shall be adjusted by the | 13 |
| Treasurer based on the Consumer
Price Index for the North | 14 |
| Central Region as published by the United States
Department of | 15 |
| Labor, Bureau of Labor Statistics for the immediately preceding
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| calendar year. Every contribution received by a financial | 17 |
| institution for
investment in the College Savings Pool shall be | 18 |
| transferred from the financial
institution to a location | 19 |
| selected by the State Treasurer within one business
day | 20 |
| following the day that the funds must be made available in | 21 |
| accordance with
federal law. All communications from the State | 22 |
| Treasurer to participants and donors shall
reference the | 23 |
| participating financial institution at which the account was
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| processed.
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| The Treasurer may invest the moneys in the College Savings | 26 |
| Pool in the same
manner, in the same types of investments, and |
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| subject to the same limitations
provided for the investment of | 2 |
| moneys by the Illinois State Board of
Investment. To enhance | 3 |
| the safety and liquidity of the College Savings Pool,
to ensure | 4 |
| the diversification of the investment portfolio of the pool, | 5 |
| and in
an effort to keep investment dollars in the State of | 6 |
| Illinois, the State
Treasurer shall make a percentage of each | 7 |
| account available for investment in
participating financial | 8 |
| institutions doing business in the State. The State
Treasurer | 9 |
| shall deposit with the participating financial institution at | 10 |
| which
the account was processed the following percentage of | 11 |
| each account at a
prevailing rate offered by the institution, | 12 |
| provided that the deposit is
federally insured or fully | 13 |
| collateralized and the institution accepts the
deposit: 10% of | 14 |
| the total amount of each account for which the current age of
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| the beneficiary is less than 7 years of age, 20% of the total | 16 |
| amount of each
account for which the beneficiary is at least 7 | 17 |
| years of age and less than 12
years of age, and 50% of the total | 18 |
| amount of each account for which the current
age of the | 19 |
| beneficiary is at least 12 years of age. The State Treasurer | 20 |
| shall
adjust each account at least annually to ensure | 21 |
| compliance with this Section.
The Treasurer shall develop, | 22 |
| publish, and implement an investment policy
covering the | 23 |
| investment of the moneys in the College Savings Pool. The | 24 |
| policy
shall be published (i) at least once each year in at | 25 |
| least one newspaper of
general circulation in both Springfield | 26 |
| and Chicago and (ii) each year as part
of the audit of the |
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| College Savings Pool by the Auditor General, which shall be
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| distributed to all participants. The Treasurer shall notify all | 3 |
| participants
in writing, and the Treasurer shall publish in a | 4 |
| newspaper of general
circulation in both Chicago and | 5 |
| Springfield, any changes to the previously
published | 6 |
| investment policy at least 30 calendar days before implementing | 7 |
| the
policy. Any investment policy adopted by the Treasurer | 8 |
| shall be reviewed and
updated if necessary within 90 days | 9 |
| following the date that the State Treasurer
takes office.
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| Participants shall be required to use moneys distributed | 11 |
| from the College
Savings Pool for qualified expenses at | 12 |
| eligible educational institutions.
"Qualified expenses", as | 13 |
| used in this Section, means the following: (i)
tuition, fees, | 14 |
| and the costs of books, supplies, and equipment required for
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| enrollment or attendance at an eligible educational | 16 |
| institution and (ii)
certain room and board expenses incurred | 17 |
| while attending an eligible
educational institution at least | 18 |
| half-time. "Eligible educational
institutions", as used in | 19 |
| this Section, means public and private colleges,
junior | 20 |
| colleges, graduate schools, and certain vocational | 21 |
| institutions that are
described in Section 481 of the Higher | 22 |
| Education Act of 1965 (20 U.S.C. 1088)
and that are eligible to | 23 |
| participate in Department of Education student aid
programs. A | 24 |
| student shall be considered to be enrolled at
least half-time | 25 |
| if the student is enrolled for at least half the full-time
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| academic work load for the course of study the student is |
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| pursuing as
determined under the standards of the institution | 2 |
| at which the student is
enrolled. Distributions made from the | 3 |
| pool for qualified expenses shall be
made directly to the | 4 |
| eligible educational institution, directly to a vendor, or
in | 5 |
| the form of a check payable to both the beneficiary and the | 6 |
| institution or
vendor. Any moneys that are distributed in any | 7 |
| other manner or that are used
for expenses other than qualified | 8 |
| expenses at an eligible educational
institution shall be | 9 |
| subject to a penalty of 10% of the earnings unless the
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| beneficiary dies, becomes disabled, or receives a scholarship | 11 |
| that equals or
exceeds the distribution. Penalties shall be | 12 |
| withheld at the time the
distribution is made.
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| The Treasurer shall limit the contributions that may be | 14 |
| made on behalf of a
designated beneficiary based on an | 15 |
| actuarial estimate of what is required to
pay tuition, fees, | 16 |
| and room and board for 5 undergraduate years at the highest
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| cost eligible educational institution. The contributions made | 18 |
| on behalf of a
beneficiary who is also a beneficiary under the | 19 |
| Illinois Prepaid Tuition
Program shall be further restricted to | 20 |
| ensure that the contributions in both
programs combined do not | 21 |
| exceed the limit established for the College Savings
Pool. The | 22 |
| Treasurer shall provide the Illinois Student Assistance | 23 |
| Commission
each year at a time designated by the Commission, an | 24 |
| electronic report of all
participant accounts in the | 25 |
| Treasurer's College Savings Pool, listing total
contributions | 26 |
| and disbursements from each individual account during the
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| previous calendar year. As soon thereafter as is possible | 2 |
| following receipt of
the Treasurer's report, the Illinois | 3 |
| Student Assistance Commission shall, in
turn, provide the | 4 |
| Treasurer with an electronic report listing those College
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| Savings Pool participants who also participate in the State's | 6 |
| prepaid tuition
program, administered by the Commission. The | 7 |
| Commission shall be responsible
for filing any combined tax | 8 |
| reports regarding State qualified savings programs
required by | 9 |
| the United States Internal Revenue Service. The Treasurer shall
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| work with the Illinois Student Assistance Commission to | 11 |
| coordinate the
marketing of the College Savings Pool and the | 12 |
| Illinois Prepaid Tuition
Program when considered beneficial by | 13 |
| the Treasurer and the Director of the
Illinois Student | 14 |
| Assistance
Commission. The Treasurer's office shall not | 15 |
| publicize or otherwise market the
College Savings Pool or | 16 |
| accept any moneys into the College Savings Pool prior
to March | 17 |
| 1, 2000. The Treasurer shall provide a separate accounting for | 18 |
| each
designated beneficiary to each participant, the Illinois | 19 |
| Student Assistance
Commission, and the participating financial | 20 |
| institution at which the account
was processed. No interest in | 21 |
| the program may be pledged as security for a
loan. Moneys held | 22 |
| in an account invested in the Illinois College Savings Pool | 23 |
| shall be exempt from all claims of the creditors of the | 24 |
| participant, donor, or designated beneficiary of that account, | 25 |
| except for the non-exempt College Savings Pool transfers to or | 26 |
| from the account as defined under subsection (j) of Section |
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| 12-1001 of the Code of Civil Procedure (735 ILCS 5/12-1001(j)).
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| The assets of the College Savings Pool and its income and | 3 |
| operation shall
be exempt from all taxation by the State of | 4 |
| Illinois and any of its
subdivisions. The accrued earnings on | 5 |
| investments in the Pool once disbursed
on behalf of a | 6 |
| designated beneficiary shall be similarly exempt from all
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| taxation by the State of Illinois and its subdivisions, so long | 8 |
| as they are
used for qualified expenses. Contributions to a | 9 |
| College Savings Pool account
during the taxable year may be | 10 |
| deducted from adjusted gross income as provided
in Section 203 | 11 |
| of the Illinois Income Tax Act. The provisions of this
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| paragraph are exempt from Section 250 of the Illinois Income | 13 |
| Tax Act.
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| The Treasurer shall adopt rules he or she considers | 15 |
| necessary for the
efficient administration of the College | 16 |
| Savings Pool. The rules shall provide
whatever additional | 17 |
| parameters and restrictions are necessary to ensure that
the | 18 |
| College Savings Pool meets all of the requirements for a | 19 |
| qualified state
tuition program under Section 529 of the | 20 |
| Internal Revenue Code (26 U.S.C. 529).
The rules shall provide | 21 |
| for the administration expenses of the pool to be paid
from its | 22 |
| earnings and for the investment earnings in excess of the | 23 |
| expenses and
all moneys collected as penalties to be credited | 24 |
| or paid monthly to the several
participants in the pool in a | 25 |
| manner which equitably reflects the differing
amounts of their | 26 |
| respective investments in the pool and the differing periods
of |
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| time for which those amounts were in the custody of the pool. | 2 |
| Also, the
rules shall require the maintenance of records that | 3 |
| enable the Treasurer's
office to produce a report for each | 4 |
| account in the pool at least annually that
documents the | 5 |
| account balance and investment earnings. Notice of any proposed
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| amendments to the rules and regulations shall be provided to | 7 |
| all participants
prior to adoption. Amendments to rules and | 8 |
| regulations shall apply only to
contributions made after the | 9 |
| adoption of the amendment.
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| Upon creating the College Savings Pool, the State Treasurer | 11 |
| shall give bond
with 2 or more sufficient sureties, payable to | 12 |
| and for the benefit of the
participants in the College Savings | 13 |
| Pool, in the penal sum of $1,000,000,
conditioned upon the | 14 |
| faithful discharge of his or her duties in relation to
the | 15 |
| College Savings Pool.
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| (Source: P.A. 92-16, eff. 6-28-01; 92-439, eff. 8-17-01; | 17 |
| 92-626, eff. 7-11-02; 93-812, eff. 1-1-05.)
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| Section 10. The Code of Civil Procedure is amended by | 19 |
| changing Section 12-1001 as follows:
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| (735 ILCS 5/12-1001)
(from Ch. 110, par. 12-1001)
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| Sec. 12-1001. Personal property exempt. The following | 22 |
| personal property,
owned by the debtor, is exempt from | 23 |
| judgment, attachment, or distress for rent:
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| (a) The necessary wearing apparel, bible, school |
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| books, and family
pictures of the debtor and the debtor's | 2 |
| dependents;
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| (b) The debtor's equity interest, not to exceed $4,000 | 4 |
| in
value, in any
other property;
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| (c) The debtor's interest, not to exceed $2,400
in | 6 |
| value,
in any one motor
vehicle;
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| (d) The debtor's equity interest, not to exceed $1,500 | 8 |
| in
value,
in any
implements, professional books, or tools | 9 |
| of the trade of the debtor;
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| (e) Professionally prescribed health aids for the | 11 |
| debtor or a dependent of
the debtor;
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| (f) All proceeds payable because of the death of the | 13 |
| insured and the
aggregate net cash value of any or all life | 14 |
| insurance and endowment
policies and annuity contracts | 15 |
| payable to a wife or husband of the insured,
or to a child, | 16 |
| parent, or other person dependent upon the insured, whether
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| the power to change the beneficiary is reserved to the | 18 |
| insured or not and
whether the insured or the insured's | 19 |
| estate is a contingent beneficiary or not;
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| (g) The debtor's right to receive:
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| (1) a social security benefit, unemployment | 22 |
| compensation, or public
assistance benefit;
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| (2) a veteran's benefit;
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| (3) a disability, illness, or unemployment | 25 |
| benefit; and
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| (4) alimony, support, or separate maintenance, to |
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| the extent reasonably
necessary for the support of the | 2 |
| debtor and any dependent of the debtor.
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| (h) The debtor's right to receive, or property that is | 4 |
| traceable to:
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| (1) an award under a crime victim's reparation law;
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| (2) a payment on account of the wrongful death of | 7 |
| an individual of whom
the debtor was a dependent, to | 8 |
| the extent reasonably necessary for the support
of the | 9 |
| debtor;
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| (3) a payment under a life insurance contract that | 11 |
| insured the life of
an individual of whom the debtor | 12 |
| was a dependent, to the extent reasonably
necessary for | 13 |
| the support of the debtor or a dependent of the debtor;
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| (4) a payment, not to exceed $15,000 in value, on | 15 |
| account
of personal
bodily injury of the debtor or an | 16 |
| individual of whom the debtor was a
dependent; and
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| (5) any restitution payments made to persons | 18 |
| pursuant to the federal
Civil Liberties Act of 1988 and | 19 |
| the Aleutian and Pribilof Island
Restitution Act, P.L. | 20 |
| 100-383.
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| For purposes of this subsection (h), a debtor's right | 22 |
| to receive an award
or payment shall be exempt for a | 23 |
| maximum of 2 years after the debtor's right
to receive the | 24 |
| award or payment accrues; property traceable to an
award or | 25 |
| payment shall be exempt for a maximum of 5 years after the | 26 |
| award
or payment accrues; and an award or payment and |
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| property traceable
to an award or payment shall be exempt | 2 |
| only to the extent of the amount
of the award or payment, | 3 |
| without interest or appreciation from the date
of the award | 4 |
| or payment.
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| (i) The debtor's right to receive an award under Part | 6 |
| 20 of Article II of
this Code relating to crime victims' | 7 |
| awards.
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| (j) Moneys held in an account invested in the Illinois | 9 |
| College Savings Pool of which the debtor is a participant | 10 |
| or donor, except the following non-exempt contributions: | 11 |
| (1) any contribution to such account by the debtor | 12 |
| as participant or donor that is made with the actual | 13 |
| intent to hinder, delay, or defraud any creditor of the | 14 |
| debtor; | 15 |
| (2) any contributions to such account by the debtor | 16 |
| as participant during the 365 day period prior to the | 17 |
| date of filing of the debtor's petition for bankruptcy | 18 |
| that, in the aggregate during such period, exceed the | 19 |
| amount of the annual gift tax exclusion under Section | 20 |
| 2503(b) of the Internal Revenue Code of 1986, as | 21 |
| amended, in effect at the time of contribution; or | 22 |
| (3) any contributions to such account by the debtor | 23 |
| as participant during the period commencing 730 days | 24 |
| prior to and ending 366 days prior to the date of | 25 |
| filing of the debtor's petition for bankruptcy that, in | 26 |
| the aggregate during such period, exceed the amount of |
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| the annual gift tax exclusion under Section 2503(b) of | 2 |
| the Internal Revenue Code of 1986, as amended, in | 3 |
| effect at the time of contribution. | 4 |
| For purposes of this subsection (j), "account" | 5 |
| includes all accounts for a particular designated | 6 |
| beneficiary, of which the debtor is a participant or donor.
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| Money due the debtor from the sale of any personal property | 8 |
| that was
exempt from judgment, attachment, or distress for rent | 9 |
| at the
time of the sale is exempt from attachment and | 10 |
| garnishment to the same
extent that the property would be | 11 |
| exempt had the same not been sold by
the debtor.
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| If a debtor owns property exempt under this Section and he | 13 |
| or she purchased
that property with the intent of converting | 14 |
| nonexempt property into exempt
property or in fraud of his or | 15 |
| her creditors, that property shall not be
exempt from judgment, | 16 |
| attachment, or distress for rent. Property acquired
within 6 | 17 |
| months of the filing of the petition for bankruptcy shall be | 18 |
| presumed
to have been acquired in contemplation of bankruptcy.
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| The personal property exemptions set forth in this Section | 20 |
| shall apply
only to individuals and only to personal property | 21 |
| that is used for personal
rather than business purposes. The | 22 |
| personal property exemptions set forth
in this Section shall | 23 |
| not apply to or be allowed
against any money, salary, or wages | 24 |
| due or to become due to the debtor that
are required to be | 25 |
| withheld in a wage
deduction proceeding under Part 8 of this
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| Article XII.
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| (Source: P.A. 94-293, eff. 1-1-06.)
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