Wisconsin Bankruptcy Law: How to Protect Personal Property

Wisconsin Bankruptcy Law: How to Protect Personal Property

Wisconsin Bankruptcy Law is designed to provide relief for individuals facing overwhelming debt. One of the primary concerns for many individuals contemplating bankruptcy is the potential loss of personal property. Understanding how to protect your assets under Wisconsin bankruptcy laws is crucial for safeguarding your financial future.

In Wisconsin, there are generally two types of bankruptcy filings that individuals may consider: Chapter 7 and Chapter 13. Each has its own set of rules regarding asset protection.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy, often referred to as “liquidation bankruptcy,” allows individuals to eliminate most of their unsecured debts, such as credit card bills and medical expenses. However, during this process, the bankruptcy trustee may liquidate non-exempt assets to pay creditors. Unfortunately, this can result in the loss of some personal property.

Fortunately, Wisconsin has a set of exemptions that allow individuals to retain certain assets during bankruptcy. Some key exemptions include:

  • Homestead Exemption: Individuals can protect up to $75,000 of equity in their primary residence, and up to $150,000 for a married couple.
  • Motor Vehicle Exemption: Debtors can exempt up to $4,000 in equity in a vehicle, or $7,000 for a couple.
  • Personal Property Exemption: Up to $12,000 in personal property can be exempted, including household goods, clothing, and appliances.

Chapter 13 Bankruptcy

Unlike Chapter 7, Chapter 13 bankruptcy is designed for individuals who have a regular income and want to repay some or all of their debts over a period of time, typically three to five years. One of the key benefits of Chapter 13 is that it allows debtors to keep their property, as long as they adhere to their repayment plan.

In a Chapter 13 case, debtors propose a repayment plan to the bankruptcy court outlining how they intend to repay their creditors. As long as the debtor makes the required payments, they can usually keep their home, vehicle, and other personal property, even if the total value exceeds the exemptions.

Strategies to Protect Personal Property

In addition to relying on state exemptions, there are several strategies individuals can employ to protect their personal property during bankruptcy:

  • Consult with a Bankruptcy Attorney: An experienced attorney can guide you through the complexities of Wisconsin bankruptcy law and help you understand how to maximize your exemptions.
  • Consider Asset Valuation: Ensure that your property is accurately valued. If the market value is lower than you think, it could be exempt under Wisconsin’s laws.
  • Reevaluate Ownership: In some cases, transferring ownership of certain assets to a spouse or family member before filing can protect them. However, this must be done carefully, as fraudulent transfers can be challenged in court.
  • Budget and Plan: Meeting with a financial planner can help ensure that your repayment plan in Chapter 13 is manageable while allowing you to keep your essential assets.

Bankruptcy can be a daunting process, but understanding how to protect your personal property under Wisconsin Bankruptcy Law is essential. By leveraging the available exemptions and seeking professional guidance, you can navigate this challenging time while preserving your assets.