Most people want to know whether they can keep valuable property before filing for bankruptcy—especially a home. If you qualify to use the Wisconsin homestead exemption, you can protect some or all of the equity in your house. In this article, we explain:
For more bankruptcy information, read How to File for Bankruptcy in Wisconsin. Not only will you find answers, but it includes helpful checklists and a link to an interactive bankruptcy quiz. Or, try the start-to-finish bankruptcy guide, What You Need to Know to File for Bankruptcy.
Wisconsin lets filers choose between the federal exemption system and Wisconsin's state exemption system. You can't mix exemptions from both lists, however. Start by selecting the set that will best protect critical assets.
We've listed both exemption amounts below so you can compare the two. Also, spouses who co-own the home and file bankruptcy together can double the homestead amount. Learn more about filing considerations for married couples.
If you use the federal homestead exemption, you can protect $25,150 of equity in your personal residence if you file individually. This figure increases to $50,300 for married couples. (These figures are valid as of April 1, 2019, and will adjust on April 1, 2022.) Check out more federal bankruptcy exemptions.
By contrast, the Wisconsin homestead exemption is much more generous. A single filer can exempt up to $75,000 of home equity. Spouses can double the amount to $150,000. (Wis. Stat. Ann § 815.20.) You'll find Wisconsin bankruptcy exemptions here.
You can use Wisconsin's homestead exemption to protect your home, condominium, mobile or manufactured home, co-op, or unincorporated co-op. You might be able to use the homestead exemption in other instances, too, so check with a local bankruptcy attorney if you plan to leave the home temporarily or if you're involved in a rental or lease transaction.
You can file for bankruptcy in Wisconsin after living there for more than 180 days. However, you must live in Wisconsin much longer before using Wisconsin exemptions—at least 730 days before filing, to be exact. Otherwise, you'd use the previous state's exemptions.
But suppose you lived in multiple states during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two-year period that immediately preceded your filing. (11 U.S.C. § 522(b)(3)(A).) Learn more about filing for bankruptcy after moving to a new state.
In Wisconsin, the homestead exemption is automatic—you don't have to file a homestead declaration with the recorder's office before filing for bankruptcy. However, you must list the homestead exemption on Schedule C: The Property You Claim as Exempt when completing your bankruptcy forms. Keep in mind that you'll need to meet other requirements to prevent losing your home, too. Find out more in Your Home in Chapter 7 or Your Home in Chapter 13.
The process is different outside of bankruptcy. Suppose a creditor tries to collect a judgment entered against you by forcing a sale or filing a lien against your home. In that case, you can ask a court for a declaratory judgment. The declaratory judgment would act as an order protecting your equity up to the amount allowed by the homestead exemption. Creditors must comply with the court's orders, including releasing any liens already recorded. (Wis. Stat. Ann. § 806.04.)
You'll find Wisconsin's homestead exemption by looking for Wis. Stat. Ann § 815.20 on the Wisconsin State Legislature Statutes & Constitution webpage. Learn about finding state statutes in Laws and Legal Research.
This overview cannot provide all of the information you'll need to file a bankruptcy case. For more detailed information, consider buying a self-help book such as How to File Chapter 7 Bankruptcy by Attorney Cara O'Neill and Albin Renauer J.D.
Updated July 13, 2021