When you file for bankruptcy, you can protect certain property from sale to satisfy your creditors. You do this by classifying the property as “exempt,” meaning it is exempt from the reach of creditors. If you are filing for bankruptcy in Wisconsin, you have the ability to choose whether you want to claim state or federal bankruptcy exemptions. Wisconsin is one of the few states that allows for this and it can be a huge advantage should you weigh out your options and choose wisely.
Choosing State or Federal Bankruptcy Exemptions
With Chapter 13 bankruptcy, you get to retain both exempt and nonexempt property. You will be responsible for paying back property value to your creditors through an established payment plan executed over several years. With Chapter 7 bankruptcy, however, the bankruptcy trustee has the authority to sell the property to satisfy creditors. Property that is eligible to be sold to benefit creditors is called “nonexempt.” “Exempt” property will be protected from sale.
Additionally, if you file Chapter 13 bankruptcy, exemptions can be used in order to reduce the amount of money that you will be required to pay to satisfy your unsecured creditors. If you are concerned about losing specific property in bankruptcy proceedings, there are several strategies you may employ to protect it. One such strategy is through the use of exemptions. In Wisconsin, you not only can choose some property as exempt, but you can choose between the Wisconsin exemption scheme and the federal exemption scheme. The schemes differ in several key respects. Choosing the one that best protects your assets is important. You must choose one scheme or the other. You cannot pick and choose from both the Wisconsin and federal exemption schemes.
Some of the more notable exemptions for those choosing the Wisconsin state scheme include:
- $75,000 homestead exemption
- $4,000 motor vehicle exemption
- $12,000 consumer goods exemption
- $5,000 savings and checking accounts exemption
These amounts double if you are married and are jointly filing for bankruptcy with your spouse. This is also true for the amounts of notable exemptions in the federal state, which include:
- $22,975 homestead exemption
- $3,675 motor vehicle exemption
- $12,250 household goods exemption
- $1,225 exemption applicable to anything you own (referred to as the “wild card” exemption
Also, under both schemes, most retirement accounts are fully protected.
Wisconsin Bankruptcy Attorneys Protecting Your Best Interests
You can get through bankruptcy without losing everything. The fact that Wisconsin allows you to choose between federal and state exemptions is a big advantage and it is a significant decision to make, one of many that will present itself in the bankruptcy process. Hanson & Payne, LLC will help you evaluate your options and make sure you are choosing the scheme that maximizes property protection benefits in your individual case. Let our knowledgeable bankruptcy attorneys protect your best interests as you move forward through the bankruptcy process. Contact us today.