What are the Wisconsin Bankruptcy Exemptions?

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In a Nutshell

You will find a list of available exemptions in the federal Bankruptcy Code, or you may instead decide to use exemptions available under Wisconsin law. However, keep in mind that each state has the option of “opting out” of this scheme. Bankruptcy filers in an opt-out state may only use their state exemptions and not use the federal exemptions. As Wisconsin hasn’t opted out of the choice between state exemptions and federal exemptions, Wisconsinites who file bankruptcy can choose between federal bankruptcy exemptions or state exemptions. Actually, you will be happy to know that Wisconsin is one of the few US states that allows filers this choice, and this is a real advantage if you are filing Chapter 7 in the state. However, keep in mind that you are not allowed to cherry-pick exemptions from both lists; you can select only one set of exemptions. If you’re using Wisconsin law to exempt your property, you can also use the federal nonbankruptcy exemptions, if applicable. This also means that if you’re filing for bankruptcy in the state, you should review both sets of exemptions and then choose what scheme can best protect your property. Hiring an attorney can be helpful in this respect.

Written by the Upsolve Team.  Reviewed by Attorney Andrea Wimmer
Updated July 28, 2020


What are the Wisconsin bankruptcy exemptions, and why are they important in a Chapter 7 bankruptcy? 

Are you considering filing bankruptcy in Wisconsin, but are afraid that you will lose your possessions, such as your home? While this is a common fear among people filing for bankruptcy in the state, it is an unfounded one. Although actual bankruptcy laws can often be nuanced and complex, keep in mind that the basic idea behind Wisconsin bankruptcy is to give you a fresh start so that you are no longer overwhelmed by debt, such as medical bills.  There are several different strategies that you can employ when filing bankruptcy to obtain debt relief to ensure your assets, such as your car, personal injury recoveries and home, remain yours. Bankruptcy exemptions are the laws that determine what property (called assets) you can keep from your creditors. When you file Chapter 7 bankruptcy in Wisconsin, the bankruptcy court will appoint a bankruptcy trustee. The trustee has the authority to sell all your non-exempt property to pay your creditors. The trustee, however, can’t sell your exempt assets to pay your creditors. Bankruptcy exemptions are specific laws designed to protect your property, such as retirement accounts, for your use. In practical terms, many Chapter 7 filers in Wisconsin don’t have assets beyond what is protected by an exemption; as a result, they don’t have to part with a lot in bankruptcy.

Does Wisconsin allow the use of federal bankruptcy exemptions?

You will find a list of available exemptions in the federal Bankruptcy Code, or you may instead decide to use exemptions available under Wisconsin law. However, keep in mind that each state has the option of “opting out” of this scheme. Bankruptcy filers in an opt-out state may only use their state exemptions and not use the federal exemptions. As Wisconsin hasn’t opted out of the choice between state exemptions and federal exemptions, Wisconsinites who file bankruptcy can choose between federal bankruptcy exemptions or state exemptions. 

Actually, you will be happy to know that Wisconsin is one of the few US states that allows filers this choice, and this is a real advantage if you are filing Chapter 7 in the state. However, keep in mind that you are not allowed to cherry-pick exemptions from both lists; you can select only one set of exemptions. If you’re using Wisconsin law to exempt your property, you can also use the federal nonbankruptcy exemptions, if applicable. This also means that if you’re filing for bankruptcy in the state, you should review both sets of exemptions and then choose what scheme can best protect your property. Hiring an attorney can be helpful in this respect.

Wisconsin Bankruptcy Exemptions

Bankruptcy laws in the country recognize that taking everything from a person — even their house and personal effects — is likely to work against the law's primary intent to return you to a stable and productive financial condition. This is why the law allows filers to "exempt" certain property, such as a home when going through either a Chapter 7 or Chapter 13 bankruptcy case. 

When you file a Chapter 7 bankruptcy in Wisconsin, all your assets become the property of your bankruptcy estate. And without bankruptcy exemptions, your bankruptcy trustee may sell your property, such as furniture and books, to pay your creditors. However, the proper use of exemption laws in the state can prevent this. Exemptions can either protect the full value of your asset or up to a specific monetary amount. And if all your property is exempt, you may even discharge your debts without losing any asset, which is great. However, keep in mind that you have to “claim” these exemptions in your Wisconsin bankruptcy filing; otherwise, they won’t apply.

Real Property - The Wisconsin Homestead Exemption

Almost all states in the US provide protection for equity in your family home. Also, note that many states have recently increased the amount of their exemptions. One of the most important items of exempt property is your personal residence (also known in legal terms as a homestead). The law in Wisconsin allows an individual filer an exemption of up to $75,000 in value in a homestead. On the other hand, a couple filing together would have an exemption of $150,000. 

When determining whether your residence is exempt under the Wisconsin homestead exemption, you should keep in mind that the law is applicable to your primary residence only. So, investment property isn’t protected under the law. 

The state homestead exemption limits the property to forty acres. However, bankruptcy filers are not guaranteed forty acres. Instead, the bankruptcy statute restricts the homestead exemption in Wisconsin to your primary dwelling and as much land surrounding the property as is reasonably necessary to use that dwelling as a home.

Wild Card Exemption

The wildcard exemption has a special place in a Chapter 7 bankruptcy. This is mainly because it allows you to protect your otherwise unprotected assets. And this means you can protect those assets which are typically not covered under standard federal exemptions from getting liquidated. Wisconsin exemptions and federal bankruptcy exemptions are quite similar. This is because both sets of laws have a homestead exemption, and other exemptions, such as pensions, insurance benefits, and child support, among others. However, keep in mind that only the federal bankruptcy exemptions have a wildcard exemption that can be applied to anything you own (this is up to a specific value). 

Personal Property Exemptions

These bankruptcy exemptions cover your other assets, such as cars and health aids. Some personal property exemptions in the state may be for any combination of assets up to an aggregate amount. On the other hand, some exemptions apply only to specific items, like jewelry and household goods. Some of the Wisconsin bankruptcy exemptions filers may use to protect their property in a Chapter 7 bankruptcy or Chapter 13 case include the following.

Motor Vehicle

During a Chapter 7 bankruptcy in the state, the Wisconsin motor vehicle exemption will help determine if you can keep your vehicle. Wisconsin bankruptcy laws protect the equity in your car and truck when filing a Chapter 7 Bankruptcy. Note that if the equity in your motor vehicle or truck is lower than the state bankruptcy law motor vehicle exemption, then the bankruptcy trustee can’t sell your vehicle or truck in order to repay your debts. Wisconsin bankruptcy laws allow you to protect up to $4,000 in equity for any motor vehicle that you own. 

Married couples filing together are allowed to double the exemption amount and claim up to $8,000. Also, remember that Wisconsin bankruptcy law allows filers to exempt up to $12,000 in personal property and apply any unused portion of that amount to your motor vehicle. And, married couples filing together may double the amount of exemption. 

Other Personal Property 

You can protect the following personal property: 

Personal property can include various items, such as furniture, electronics, and art, etc. You can protect up to $12,000 in aggregate value for any tangible property (excluding real estate) used for family or personal use. Personal property includes household goods, furnishings, and appliances. It also includes wearing apparel, keepsakes, jewelry, books, various musical instruments, such as a piano and guitar, firearms, animals and sporting goods.

Money Benefits

Pension and Retirement Benefits Exemption

Wisconsin also offers you various other exemptions. Veterans' benefits, as well as war pensions, are exempt under Wisconsin. Stat. Ann. § 815.18(3)(n)). Also, pensions for firefighters, certain municipal employees, and police officers that work in cities with more than 100,000 residents are exempt under Wisconsin. Stat. Ann. § 815.18(3)(ef)). All pensions for public employees are exempt under Wisconsin. Stat. Ann. § 40.08) and tax-exempt retirements are exempt under Wisconsin. Stat. Ann. § 815.18(3)(j)).

Insurance

  • Proceeds of federal disability insurance are exempt under the law.

  • Fraternal society benefits are also exempt under the law.

  • Fire insurance proceeds for your destroyed exempt property are exempt for two years from the date of receipt

  • If the beneficiary is a married woman, then life insurance policy or its proceeds are exempt up to $5,000

  • You can protect your life insurance proceeds that are held in trust, provided the clause prohibits proceeds of insurance from being used to pay your creditors

  • Life insurance proceeds are exempt if the beneficiary was dependent on you

  • You can protect an unmatured life insurance contract. However, this does not include credit insurance contract that you own 

Wage Exemption

You can protect up to 75 percent of weekly income if it is reasonably necessary for support.  However, it should not be less than thirty times the higher of federal or state minimum wage. This exemption is available under Wisconsin. Stat. Ann. § 815.18(3)(h).

Prisoner property

You can protect wages earned during imprisonment under Wisconsin. Stat. Ann. §§ 303.065(4)(b), 303.10(7), and 303.08(3).

Alimony and Child Support 

As certain family law orders are considered important in the country as a matter of public policy, child support and alimony are considered exempt in Wisconsin to the extent that these payments are reasonably necessary for the ongoing support of the bankruptcy filer and any of her or his dependents. You can use Wis. Stat. Ann. § 815.18(3)(c) to avail this exemption.

Other Wisconsin Exemptions

Family Business and Trade Implements 

You can protect up to $15,000 in tools, professional books, and equipment, or the same amount in a closely-held company under Wisconsin. Stat. Ann. § 815.18(3)(b).

Miscellaneous 

The law in the state exempts burial facilities, cemetery plots, coffins as well as tombstones intended for your use or the use of your family.

Filing Chapter 7 bankruptcy? 

Filing for bankruptcy in Wisconsin can be a very time-consuming process. Also, you have to focus on making money in order to get back on your feet as soon as possible and also avoid losing your prized possessions, such as your car, home, or other possessions. So, the more time you will spend focusing on the nuances and complexities of your bankruptcy case, the less time you will have to overcome the problems hurting your finances in the first place. If you are filing for bankruptcy in Wisconsin, but are not sure which Wisconsin bankruptcy exemptions will be best in your individual situation, consider speaking to a  bankruptcy attorney in the state. Developing a good attorney-client relationship can give you some peace of mind as you go through the bankruptcy process.

Wisconsin's bankruptcy exemption amounts are periodically adjusted. So, to ensure that all your figures are current, you should check for updates by visiting the official site of the Wisconsin State Legislature or talk to a knowledgeable and professional bankruptcy attorney in the state to protect your property and get a fresh start.

An bankruptcy lawyer in Wisconsin will help you:

  • Make the most of Wisconsin state law and applicable federal law

  • Help you decide between Chapter 7 and Chapter 13 bankruptcy

  • Effectively and efficiently guide you through bankruptcy, including preparation of the bankruptcy forms

  • Help you achieve the best possible outcome for your case

  • Help you resolve your case as favorably and efficiently as possible

If you are not able to afford a bankruptcy attorney to help you, you can take this simple and short quiz to find out if Upsolve’s free web app is right for you. 



Written By:

The Upsolve Team

Upsolve is fortunate to have a remarkable team of bankruptcy attorneys, as well as finance and consumer rights professionals, as contributing writers to help us keep our content up to date, informative, and helpful to everyone.

Attorney Andrea Wimmer

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Andrea practiced exclusively as a bankruptcy attorney in consumer Chapter 7 and Chapter 13 cases for more than 10 years before joining Upsolve, first as a contributing writer and editor and ultimately joining the team as Managing Editor. While in private practice, Andrea handled... read more about Attorney Andrea Wimmer

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