Protecting your Assets from Bankruptcy in Wisconsin
When you file a bankruptcy case in Wisconsin, especially a bankruptcy case under chapter 7, we want you to keep as much of your property as possible. We do that by declaring as much of your property to be exempt as is legally possible. We don’t worry very much about property on which you’ve borrowed money. This is especially true when you owe more on the property than it’s worth. Most often, this is the case for car loans. Today, this is all too frequently the case with loans on your house too. Wisconsin offers generous exemptions in bankruptcy. In addition, Wisconsin offers you the choice of selecting either Wisconsin exemptions or Federal exemptions. We will analyze your case using both the Wisconsin exemptions and the Federal exemptions to determine which is most favorable to you.
If you moved to Wisconsin within the past 2 years, however, the Bankruptcy Code does not allow you to use Wisconsin exemptions. You then will have to use exemptions of the state you lived in for the most part of the 180 days before that 2-year period. This can get tricky. We will go over it with you to make sure you select the right exemptions from the right state. If you moved recently, please be sure to tell us about it.
Wisconsin bankruptcy courts take a liberal view toward reasonable bankruptcy planning. However, Wisconsin bankruptcy courts have frequently stated that “pigs get fat and hogs get slaughtered” when it comes to exemption planning for bankruptcy. Be very careful about this and consult with an experienced Wisconsin bankruptcy attorney who can guide you through these sorts of tricky and technical issues. You can save a lot of money if you do this correctly. Your bankruptcy can be a complete failure if you are careless with your bankruptcy planning.
One of the worst things you could do before your bankruptcy is to give your assets away, especially to a friend, family, relative or favorite charity. This is fraud. You could lose your right to a discharge. You could even be committing a crime if you do this and don’t disclose it to the bankruptcy court.
Another bad idea before filing your bankruptcy case is to pay back debts, especially to friends, family members or close business associates. Naturally, people want to take care of their friends. But these sorts of payments are considered to be preferential. You have to disclose these payments. If you don’t you could lose your right to a discharge and you might be committing a crime. If the trustee discovers these sorts of transfers, he can sue the person you gave property to or paid back. If you pay back a friend, family or close associate, the trustee can sue that person for payments made as long as a year before you filed your bankruptcy case.
There are steps to be taken when planning for bankruptcy. When you have questions about such matters, please discuss them with us in detail so we can do the best we can for you in your particular unique case.
These are the most important exemptions under Wisconsin law:
|Type of Property||Amount of Exemption|
|Homestead||$75,000 or the proceeds of sale for up to two years if you plan to buy another house|
|Insurance||Federal disability insurance benefits.Fraternal benefit society benefits.
Life insurance proceeds for someone debtor depended on, needed for support.
Unmatured life insurance contract (except credit insurance contract) if debtor owns contract & insured is debtor or dependent, or someone upon whom debtor is dependent.
Unmatured life insurance contract’s accrued dividends, interest, or loan value to $4,000 total, if debtor owns contract & insured is debtor or dependent, or someone debtor is dependent on.
|Family law related assets||100% of Alimony, child support needed for support|
|Pensions, retirement benefits||Some municipal employees.Firefighters, police officers who worked in city with population over 100,000.
Private or public retirement or disability benefits, including IRAs and KEOGHs, 401(k), subject to many exceptions & limitations. (Don’t worry – most IRAs, 401(k) plans, 403(b) plans and similar plans are excluded from bankruptcy estates under the Bankruptcy Code.)
|Personal Property||Burial plot, tombstone, coffin (husband & wife may double).College savings account or tuition trust fund.
Fire & casualty proceeds for destroyed exempt property for 2 years from receiving.
Lost future earnings recoveries, needed for support.
Tenant’s lease or stock interest in housing co-op, to homestead amount.
Wages used to purchase savings bonds.
Wrongful death recoveries, needed for support.
Household goods and furnishings, clothing, keepsakes, jewelry, appliances, books, musical instruments, firearms, sporting goods, animals, and other tangible personal property to $12,000 total (husband & wife may double).
Motor vehicles to $4,000 (husband & wife may double; unused portion of $12,000 personal property exemption may be added).
Personal injury recoveries to $50,000.
Deposit accounts to $5,000.
|Public Benefit||Crime victims’ compensation needed for support.Social services payments.
Veterans’ benefits under 45.03(8)(b).
|Wages||75% of weekly net income or 30 times the greater of the federal or state minimum hourly wage; bankruptcy judge may authorize more for low-income debtors.Wages of county jail prisoners
Wages of county work camp prisoners
Wages of inmates under work-release plan.
Here’s a list of the most important federal bankruptcy exemptions:
|Type of Property||Exemption|
|Homestead||$22,975 (subject to inflation adjustment)(unused portion of homestead up to $11,500 may be applied to other property)|
|Motor Vehicle||$3,675 (subject to inflation adjustment)|
|Household Furnishings, household goods, wearing apparel, appliances, books, animals, crops, musical instruments held primarily for the personal, family or household use of the debtor or a dependent of the debtor||$550 per item not to exceed $11,525 in aggregate value – also can utilize any portion of the homestead exemption not utilized by the debtor to protect his or her homestead. (subject to inflation adjustment)|
|Jewelry held for personal, family or household use of the debtor or a dependent of the debtor||$1,450 (subject to inflation adjustment)|
|Implements, professional books or tools of trade||$12,250(adjusted)|
|Insurance cash surrender or loan value||$11,525 (adjusted)|
|Benefits including social security benefits, unemployment compensation, local public assistance benefit; veterans benefit; disability, illness or employment benefit; alimony support or separate maintenance to the extent reasonably necessary for the support of debtor or debtor’s dependents; stock bonus, pension, profit-sharing, annuity or similar plan or contract on account of illness, disability, death, age or length of service (except for certain non-qualified insider plans)||100%|
|Rights to recover certain payments including: Crime victim’s reparations, wrongful death payments, life insurance contracts of persons of whom debtor was a dependent||100%|
|Personal injury claims||$15,000 (adjusted)|
|Payment for loss of future earnings of the debtor or an individual of whom debtor is dependent||100% to extent reasonably necessary for support of debtor or any dependent of the debtor|
|Retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under the Internal Revenue Code.||100% (not exempt but excluded from bankruptcy estate)|