Can You Protect Your Home in Bankruptcy Under Wisconsin Laws?

Filing for bankruptcy can be a daunting process, especially when it comes to protecting your home. If you reside in Wisconsin, it’s essential to understand how state laws interact with federal bankruptcy rules and the options you have to safeguard your primary residence.

Under Wisconsin’s bankruptcy laws, homeowners can protect their properties through various exemptions. The state offers a homestead exemption, which allows individuals to exempt up to $75,000 of equity in their primary residence. For married couples filing jointly, the exemption increases to $150,000. This protection means that if you have equity in your home within these limits, you can keep your property even after filing for bankruptcy.

Equity is defined as the current market value of your home minus any liens or mortgages against it. For example, if your home is worth $200,000 and you owe $150,000, your equity is $50,000. This amount falls within Wisconsin's homestead exemption limit, which means you can retain your home during bankruptcy proceedings.

Additionally, Wisconsin allows debtors to choose between state and federal bankruptcy exemptions. The federal homestead exemption is significantly lower, standing at $26,500 for individuals and $52,800 for married couples filing jointly. Hence, for many Wisconsin residents, the state exemption provides greater protection. Make sure to assess which exemption will benefit you more effectively based on your unique financial situation.

It's also important to differentiate between Chapter 7 and Chapter 13 bankruptcy. In a Chapter 7 bankruptcy, non-exempt assets may be sold to pay creditors, but if your home's equity falls within the exemption limits, it is protected. Meanwhile, Chapter 13 bankruptcy allows you to keep your home while creating a repayment plan for your debts. Under this plan, you can catch up on mortgage arrears over a specified period, usually three to five years.

Furthermore, in circumstances where you are behind on your mortgage payments, filing for bankruptcy may provide you with a temporary stay on foreclosure proceedings, allowing you some time to reorganize your finances. This can be a crucial advantage, offering you a chance to retain your home and negotiate alternate payment plans with your lender.

Keep in mind that to take full advantage of these protections, your case may require careful planning and legal guidance. Engaging a qualified bankruptcy attorney can ensure you navigate the legal complexities and maximize the benefits available to you under Wisconsin law. This expert guidance can be invaluable, especially if you're unsure about exemptions or the kind of bankruptcy that best suits your financial situation.

In conclusion, yes, you can protect your home in bankruptcy under Wisconsin laws. Understanding the homestead exemption and exploring your options can help you retain your residence while you work towards financial recovery. Documenting your assets accurately and seeking professional advice are key steps in effectively managing your bankruptcy case.