Most people want to know whether they can keep valuable property before filing for bankruptcy—especially a home. If you qualify to use the Wyoming homestead exemption, you can protect some or all of the equity in your house. In this article, we explain:
Some states allow bankruptcy filers to use the federal bankruptcy exemption system instead of the state system. Although Wyoming isn't one of these states, you can exempt up to $20,000 in equity in your principal residence. You can increase that amount to $40,000 if all of these conditions are met:
(Wyo. Stat. Ann. §§ 1-20-101-104.) Learn more about filing considerations for married couples.
You or your family must occupy the property before claiming the exemption. Because the property must be your principal residence, you can't use the exemption to protect an income-generating Airbnb rental unit or your getaway in the Bahamas.
Also, only the following types of property will qualify for a homestead exemption:
Also, here's a nice aspect of Wyoming's homestead law: Suppose a person entitled to a Wyoming homestead exemption dies and leaves behind a spouse or minor children. In that case, the survivors can claim the homestead. They don't have to use the home equity to pay the deceased's debts.
In Wyoming, the homestead exemption is automatic—you don't have to file a homestead declaration to claim the homestead exemption in bankruptcy. However, depending on the bankruptcy chapter file, you'll need to meet other requirements to prevent losing your home. Find out more by reading either Your Home in Chapter 7 or Your Home in Chapter 13.
Property held as a tenancy by entirety is owned by a married couple as a single marital entity, not as individuals. Wyoming is one of about 25 states where a married couple can own property as tenants by entirety.
If one spouse files for bankruptcy—not both—the bankruptcy trustee might be prevented from using the property equity to pay off debts. Your property equity could be fully protected. However, be warned that this is a tricky area of law. Talk with a local bankruptcy attorney before filing to ensure that you don't lose valuable property. Making a mistake is risky because you don't have an automatic right to dismiss a Chapter 7 case.
You'll find Wyoming's homestead exemption on the Wyoming Legislature's State Statutes & Constitution webpage (Wyo. Stat. Ann. §§ 1-20-101 et seq.). Learn about finding state statutes in Laws and Legal Research.
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We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated July 12, 2021