ORDER
For the reasons set forth in an Opinion entered this day,
IT IS THEREFORE ORDERED that the Trustee’s Objection to Exemption be and is hereby denied.
OPINION
The issue before the Court is whether earned income credits are exempt as a “public assistance benefit” pursuant to 735 ILCS 5/12-1001(g)(l).
The Debtor, Lisa Daun Brockhouse, filed her petition pursuant to Chapter 7 of the Bankruptcy Code on January 14, 1998. A divorced mother of two young children, the Debtor makes $12,000 to $13,000 per year. On January 23, 1998, the Debtor filed her 1997 Federal income tax return electronically through H & R Block and obtained a “rapid refund” of her earned income tax credit for the 1997 tax year in the gross amount of $4000, which, after finance charges and fees, amounted to $3841.05. On February 23, 1998, she amended her Schedule C-Property Claimed as Exempt to include her earned income credit as an asset of the estate and to claim an exemption for the entire amount pursuant to 735 ILCS 5/12 — 1001 (b) and 735 ILCS 5/12-1001(g)(l). The Trustee filed a timely objection to the portion of the earned income credit ($3125.05) claimed as exempt under 735 ILCS 5/12-1001(b)(l).
An earned income credit is a refundable tax credit providéd for low income workers who have dependent children and who maintain a household. 26 U.S.C. § 32. Courts have characterized the earned income credit as “an item of social welfare legislation” effectuated through income tax laws.
In re Searles,
Courts are split on the question of whether an earned income credit constitutes property of the estate pursuant to 11 U.S.C. § 541(a). The early cases addressing this issue generally found that earned income credits are not property of the estate.
See, In re Searles, supra; In re Hurles,
Pursuant to the authority granted to it by 11 U.S.C. § 522(b), the State of Illinois has chosen to opt out of the federal schedule of exemptions. Debtors in Illinois are required'to use the exemptions provided by Illinois law. 735 ILCS 5/12-1201.
In re Ball,
A number of courts from other jurisdictions have addressed the exemptibility of earned income credits, but only five courts have discussed the exemption in the context of a “public assistance” benefit similar to the Illinois exemption statute.
In re Goertz, supra; In re Brown,
In re Goertz
is distinguishable from the facts in this proceeding because the Missouri statute provided an exemption for “a
local
public assistance benefit”, (emphasis added). The court focused on the qualifying word “local”, and noted that the earned income credit is not a product of the local or state government.
Under Idaho law, an individual is entitled to exempt benefits received under “public assistance legislation”.
In re Jones, supra,
In re Jones, supra,
and
In re Brown, supra,
discussed the earned income credit in light of the Kentucky exemption for public assistance benefits. Both courts concluded that the earned income credit met the Kentucky definition of “public assistance” because it is a money grant to poor working families with dependent children.
In re Goldsberry, supra,
Other courts have been sympathetic to debtors’ claims of exemptions in earned in
*625
come credits. For example, an Ohio court rejected an exemption for earned income credit as disability payments or Aid to Dependent Children payments under the Ohio exemption law.
In re Beagle,
Leaving [earned income credit] payments subject to the satisfaction of general obligations of the recipient appears to be wholly at odds with Congress’ intent for enacting the earned income credit program.
Id. at 598.
The strongest language in support of exempting earned income credits may be found in In re Barnett, supra, where the court allowed an exemption in earned income credits under Oklahoma law because they are in the nature of earnings from personal services:
[W]e are dealing here with ‘poor, but honest’ debtors for whom the government has enacted laws intended to relieve their extreme poverty. These are not the ‘high flying’ debtors with above-average incomes that this Court frequently encounters. The debtors in this case are truly in need of a ‘fresh start’ which the Bankruptcy Code was designed to provide. It is difficult to understand why more effort is not expended by other counsel, the trustees, and the courts to permit impoverished debtors to keep their earned income credit rather than expending time, effort and legal skills in trying to take the earned income credit away from such debtors. (Footnote omitted).
The Illinois exemption statutes were enacted to protect debtors and their families by securing to them the necessary shelter and personal property required for their welfare in difficult economic circumstances.
In re Allman,
For the foregoing reasons, the Court finds that earned income credits are exempt as a “public assistance benefit” pursuant to 735 ILCS 5/12-1001(g)(l). Therefore, the Trustee’s Objection to Exemption is denied.
This Opinion is to serve as Findings of Fact and Conclusions of Law pursuant to Rule 7052 of the Rules of Bankruptcy Procedure.
See written Order.