How can I protect my property if I file for Chapter 7 bankruptcy?
Even though the number of bankruptcy filings in the state of Wisconsin has fallen to pre-recession levels, many individuals still may be faced with insurmountable debt burdens, in which case filing for bankruptcy may be the only option.
Eligibility for Bankruptcy
An individual whose income is less than the median for a household of a similar size is generally eligible for Chapter 7. If the debtor’s income is above the median, Chapter 7 may still be available provided that a means test of expenses and payments shows that the individual’s income is insufficient to meet those needs. Prior to filing for bankruptcy, it is necessary for an individual to receive credit counseling, within 6 months before filing, from an agency approved by the U.S. Trustee in the state. It is also necessary to take a debtor education course after filing before a discharge will be granted.
Wisconsin Bankruptcy Exemptions
While filing Chapter 7 bankruptcy is a difficult endeavor, it does not necessarily mean that a debtor will be forced to sell all of his or her property. In fact, certain property is protected, or exempt, from being sold to pay off debts. In Wisconsin, a debtor who is filing a bankruptcy petition has the ability to choose between Federal and state exemptions.
Some of the exemptions available in Wisconsin include:
- Residential Property – up to $75,000 in a residential dwelling, $150,000 for married couples filing jointly
- Motor Vehicles - up to $4,000 in motor vehicles
- Wages – 75% of net weekly income
- Personal Property – up to $12,000 in the total value of household goods and furnishings, clothing, jewelry, appliances, books, firearms, sporting goods and other tangible personal property
Other exemptions include savings accounts up to $1,000, personal injury (up to $50,000) and wrongful death settlements, insurance benefits (including Federal disability benefits, fire and accident insurance proceeds, un-matured life insurance policies and annuities, and life insurance payments). In addition, pensions are exempt for certain municipal employees, firefighters and police officers, military personnel, and other public employees.
Moreover, public benefits such as social security, unemployment compensation and Veteran’s war pension benefits are also exempt. Finally, Wisconsin bankruptcy also exempts certain other property. Understanding these exemptions and navigating a bankruptcy petition, however, require the skills of an experienced bankruptcy attorney.