What Are Excused Exemptions for a Bankruptcy in Wisconsin?

By Tom Streissguth

Before you file for bankruptcy in Wisconsin, you should be aware of the state's laws regarding exempt property — property that cannot be seized by the bankruptcy trustee to repay your debts. Wisconsin has its own schedule of exemptions, which include a house, a vehicle, personal belongings, and any claims in a personal injury lawsuit. An important consideration is the value of the exemption; state law limits the amount you can exempt in each item up to a specific dollar amount.

What is Bankruptcy?

Bankruptcy is a legal process of dealing with unmanageable debt and expenses. By filing a petition for bankruptcy, you are requesting that a federal court issue an automatic stay, which temporarily prevents any further collections or legal action against you. If you file a Chapter 7 bankruptcy, you allow a court-appointed trustee to seize and sell your property to repay your creditors. Individuals, married couples and businesses may file for Chapter 7 bankruptcy. In a Chapter 13 bankruptcy, you set up a repayment schedule under a trustee's supervision, and avoid seizure of your assets. A Chapter 11 bankruptcy allows you to reorganize a business while under the control of the bankruptcy court. At the end of the bankruptcy process, the court discharges (cancels) all debts that can legally be discharged, allowing you a financial "fresh start."

What is Exempt Property?

Bankruptcy law recognizes that taking everything from a debtor — even a home and personal effects — will work against the law's intent to return the debtor to a productive and stable financial condition. Thus the law allows debtors to "exempt" assets and property when going through a Chapter 7 or Chapter 11 liquidation of assets. The state of Wisconsin has its own laws regarding exempt property, which do not match those found in the federal bankruptcy code. Debtors who file for bankruptcy in Wisconsin may choose either federal or state exemption schemes.

Get a free, confidential bankruptcy evaluation. Learn More

Homestead

The most important item of exempt property is the debtor's personal residence (known in legal terminology as a homestead). In Wisconsin, the law allows an individual an exemption of up to $75,000 of value in a homestead; a couple would together have an exemption of $150,000. A home with greater value would be subject to a partial lien by a mortgage company that has extended a loan secured by the property.

Personal Property and Vehicles

Wisconsin also exempts up to $12,000 of consumer goods, such as furniture, appliances, electronics, clothing and other household items. In addition, the debtor may exempt a vehicle with a fair market value of up to $4,000. If the vehicle is worth more, then it is subject to seizure by the trustee.

Insurance and Claims

State bankruptcy exemptions in Wisconsin also include life insurance proceeds due to the debtor. This exemption is subject to the bankruptcy court's approval and may only be taken to the extent that the debtor needs the proceeds for support. Any life insurance policies held by the debtor with less than $4,000 in cash value are also exempt. If the debtor is a party in a personal injury claim, up to $50,000 of proceeds from such a claim is exempt. Wisconsin also exempts fire and casualty insurance claims paid on exempt property.

Miscellaneous Exemptions

Wisconsin law also exempts child support or alimony payments due the debtor, as well as 75 percent of the debtor's net income. Federal benefit payments, such as Social Security disability, Supplemental Security Income, and veteran's disability benefits are exempt. A business that files for bankruptcy may exempt equipment used in that business, such as computers, office equipment, inventory, books and machinery, up to a total value of $15,000. Finally, the law exempts cemetery plots, burial facilities, coffins and tombstones intended for use by the debtor or his family.

Get a free, confidential bankruptcy evaluation. Learn More
Bankruptcy Exemption Requirements

References

Related articles

What Happens if I Don't Reaffirm My Mortgage After Bankruptcy?

Filing for Chapter 7 bankruptcy is a means to discharge your debts and get a financial "fresh start." A home mortgage is a debt secured by property: the home in which you live. Filing for bankruptcy does not cancel your obligation to repay a loan if you remain in the home, nor does it end the bank's lien on the home, in case you should default on the loan. During a bankruptcy, you should consider the pros and cons of "reaffirming" your mortgage agreement.

Federal Vs. State Exemption for Chapter 7

In a Chapter 7 bankruptcy, you ask a federal court for protection from creditors. The court issues an automatic stay, which bars any collection actions or lawsuits against you. The law requires you to provide a list of all your property, including homes, cars, cash, investments, jewelry and other valuables, furniture, and business supplies. A court-appointed trustee may seize some of your property, depending on the type of debt in need of repayment. Federal law provides exemptions that allow you to protect some of your property from seizure. In addition, the states have their own rules regarding exempt property.

Can a Bankruptcy Court Freeze My Bank Account?

Filing for bankruptcy is often a decision fraught with angst and uncertainty. Debtors are sometimes concerned about their bank accounts and whether they will be frozen, effectively cutting them off from money they so desperately need. While it is true that assets, including money, may be seized to pay off your debts, whether your bank account will be frozen depends largely on what type of bankruptcy you file and whether the funds can be exempted under federal or state law.

Related articles

Bankruptcy & Exemptions in Michigan

You can relieve a dire financial situation by filing for bankruptcy protection from creditors. The law allows you to ...

What Constitutes Fraud in a Bankruptcy?

Bankruptcy proceedings allow businesses and individuals to reorganize or eliminate their debts. The United States ...

Three Options to Protect Your Car in a Bankruptcy

If you're facing Chapter 7 bankruptcy, you may lose your car. However, depending on where you live and your personal ...

Can a Health Savings Account Be Affected in a Bankruptcy?

If you file for bankruptcy protection, federal and state law governs the treatment of your assets, including any money ...

Browse by category
Ready to Begin? GET STARTED