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Bankruptcy: Wisconsin

Filing bankruptcy in Wisconsin aims to provide petitioners with an opportunity to recover from crippling debt, and to provide creditors an opportunity to recover some accounts based on the value of the debtor’s property or future earnings.  29,990 bankruptcies were filed in Wisconsin in 2010, ranking Wisconsin 18th in the nation for the number of bankruptcy filings per capita.  81% of Wisconsin’s bankruptcy petitions in 2010 sought protection under Chapter 7 bankruptcy.

Filing Bankruptcy in Wisconsin

Bankruptcy in Wisconsin is governed by federal law and Wisconsin bankruptcy cases are filed in the US Bankruptcy Courts in:

  • Wisconsin Eastern District Court: Green Bay, Kenosha, Manitowoc, Milwaukee, Oshkosh, Racine
  • Wisconsin Western District Court: Eau Claire, La Crosse, Madison, Wausau

While federal courts have jurisdiction over bankruptcy proceedings, Wisconsin law lets debtors choose from exemptions listed in the U.S. bankruptcy code or in the Wisconsin state code. The federal and state exemption systems cannot be mixed and matched; petitioners may choose one or the other. With the help of a bankruptcy attorney Wisconsin petitioners can discover what personal property the systems permit the debtor to keep in bankruptcy, and what must be sold.

Chapter 7 Bankruptcy, Wisconsin

Chapter 7 bankruptcies in Wisconsin are the most common of the state’s bankruptcy filings. Chapter 7 is suitable for petitioners who do not have substantial assets, such as significant investments or equity in a home, since a Bankruptcy Trustee may liquidate personal property that is not protected by Wisconsin’s bankruptcy exemptions. Liquidation takes place when the Trustee converts personal assets to cash for distribution to creditors. Wisconsin’s Chapter 7 bankruptcy law allows petitioners to keep some essential property; the exempt assets are strictly off-limits to creditors seeking repayment.

The vast majority of Chapter 7 cases are “no-asset” cases where no property is taken.

Wisconsin Bankruptcy Exemptions

Wisconsin’s state laws include detailed property exemptions that let petitioners keep certain personal property and assets so that debtors can rehabilitate their financial situation through bankruptcy and not be rendered entirely destitute.  Bankruptcy in Wisconsin allows petitioners to choose exemptions from the federal bankruptcy code or the state list.

Personal property exemption amounts can change, so it is recommended that petitioners meet with a Wisconsin bankruptcy attorney to learn how bankruptcy will affect their financial situation.  Wisconsin bankruptcy exemptions include:

Wisconsin Homestead Exemption

  • $75,000 total: Property you occupy or intend to occupy; sale proceeds exempt for 2 years if you intend to purchase another home (Husband and wife may double)

Wisconsin Personal Property Exemption

  • $12,000 total: Household goods and furnishings, clothing, jewelry, keepsakes, musical instruments, appliances, books, sporting goods, firearms, animals and other tangible personal property (Husband and wife may double)
  • $4,000 total: Motor vehicles (Husband and wife may double; unused portion of $12,000 personal property exemption may be added)
  • $5,000 total: Deposit accounts
  • Lost future earnings recoveries, needed for support
  • College savings account or tuition trust fund
  • Fire and casualty proceeds for destroyed exempt property for 2 years from receiving
  • Tenant’s lease or stock interest in housing co-op, to homestead amount
  • $50,000 total: Personal injury recoveries
  • Wages used to purchase savings bonds
  • Wrongful death recoveries, needed for support
  • Burial plot, tombstone or coffin (Husband and wife may double)

Wisconsin Tools of Trade Exemption

  • $15,000 total: Inventory, equipment, farm products, books and tools of trade

Wisconsin Wage Garnishment Exemption

  • 75% of weekly net income or 30 times the greater of the federal or state minimum hourly wage (Low-income debtors may be authorized for more)
  • Wages of county jail  and work camp prisoners
  • Wages of inmates under work-release plan

Wisconsin Public Benefits Exemption

  • Social services payments
  • Workers’ and Unemployment compensation
  • Veterans’ benefits
  • Crime victims’ compensation

Wisconsin Insurance Exemption

  • Federal disability insurance benefits
  • Fraternal benefit society benefits
  • Life insurance proceeds for someone debtor depended on; or proceeds held in trust by insurer, if clause prohibits proceeds from being used to pay beneficiary’s creditors
  • $4,000 total: Unmatured life insurance contract’s accrued dividends, interest or loan value, if debtor owns contract and insured is debtor or dependents, or someone debtor is dependent on
  • Unmatured life insurance contract (except credit insurance contract) if debtor owns contract and insured is debtor or dependents, or someone debtor is dependent on

Wisconsin Pensions and Retirement Savings Exemption

  • Certain municipal employees and Public employees
  • Firefighters, police officers who worked in city with population over 100,000
  • Military Pension
  • Private, public retirement or disability benefits, including 401(k), IRAs and KEOGHs, subject to exceptions and limitations

Wisconsin Miscellaneous Exemption

  • Alimony, child support
  • Property of business partnership

Chapter 13 Bankruptcy, Wisconsin

In 2010, ­19% of petitioners filed for protection under Chapter 13 bankruptcy laws in Wisconsin.  When a debtor files Chapter 13 bankruptcy in Wisconsin, a court-appointed Trustee is responsible for reorganizing debts and executing a 3-5 year repayment plan, by which creditors are repaid using the debtor’s future earnings.  Chapter 13 petitioners in Wisconsin keep most – or all – of their property.

How to File Bankruptcy in Wisconsin

A main concern for those petitioning for bankruptcy protection is to determine if the debtor’s property qualifies for crucial exemptions. The best outcome of filing for bankruptcy would be for the debtor to keep major assets and for key debts to qualify for discharge.  A Wisconsin bankruptcy attorney can evaluate a debtor’s individual circumstances and provide counsel as to whether Chapter 7 or Chapter 13 bankruptcy is a practical solution for their financial situation.

Bankruptcy Attorney: Wisconsin

It is important for debtors to know their privileges and obligations as bankruptcy petitioners.  A Wisconsin bankruptcy attorney can counsel petitioners about how the federal laws and state exemptions apply to each individual’s circumstance and advise debtors how to protect their assets and move forward from debt.