Federal 7th Circuit Court
Civil Court
Bankruptcy
Dist. Ct. erred in denying defendant-bankruptcy debtor’s request to exempt 85 percent of $24,000 in unused vacation time from his creditor’s claims, where Dist. Ct. found that unpaid wages are not exempt in bankruptcy. Illinois law permits creditors to reach 15 percent of unpaid wages, but forbids debt collection from other 85 percent of unpaid wages, and 11 USC section 522(b)(2) and (3)(A) apply state-law exemption rules to bankruptcy proceedings. Accordingly, because 85 percent of unpaid wages are exempt from creditors’ claims in Illinois, and because vacation pay is form of wages, Dist. Ct.’s decision to not exempt 85 percent of debtor’s unpaid vacation pay must be reversed.