Attorney at Debt Advisors Law Offices
Practice Areas: Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Stop Foreclosure
Filing for bankruptcy does not mean you lose everything you own. The law lets you protect certain property, such as your home, car, household items, and some retirement savings.
These protections are called bankruptcy exemptions. Wisconsin also gives many people a choice between Wisconsin exemptions and federal exemptions.
A Wisconsin bankruptcy attorney can look at your property, debts, and equity and help you understand which set of exemptions may work better for you.
An exemption can protect property you own from being used to pay your debts. For a home, car, or other property with a loan, the amount of equity is important.
Equity is the part of the property you own after subtracting what you still owe. For example, if your car is worth $12,000 and you owe $9,000 on the loan, you have $3,000 in equity. An exemption may protect that $3,000.
An exemption can protect your equity. It does not cancel your mortgage, car loan, or other valid loan.
The rules also depend on the type of bankruptcy you file. In Chapter 7, property that is not protected may be sold by the trustee. In Chapter 13, you usually keep your property, but the value of unprotected property can affect your payment plan.
The exemption you use depends on what you own. Wisconsin law protects a range of property, with different limits for homes, vehicles, personal belongings, bank accounts, and business assets.
Some common exemptions include:
For a home, the exemption applies to your equity rather than the home’s full value. A $250,000 home with a $210,000 mortgage, for example, has about $40,000 in equity before other liens and costs.
The amount you can protect depends on the property and the exemption you claim.
Many Wisconsin residents can choose federal exemptions instead of Wisconsin exemptions. The federal rules are found in 11 U.S.C. § 522.
You normally have to choose one system. You cannot pick the Wisconsin exemption for your home and a federal exemption for your car just because those choices give you more protection.
Where you lived before filing can also matter. Federal law has a 730-day residency rule. If you recently moved to Wisconsin, you may need to use the exemption rules from the state where you lived before.
For cases filed on or after April 1, 2025, some federal exemption amounts are:
|
Property |
Federal Exemption |
| Home | $31,575 |
| Motor vehicle | $5,025 |
| Household goods | $800 per item, up to $16,850 |
| Jewelry | $2,125 |
| Tools of trade | $3,175 |
| Basic wildcard | $1,675 |
| Extra wildcard | Up to $15,800 |
| Traditional and Roth IRAs | Up to $1,711,975 |
The federal wildcard can help protect property that does not fit another exemption. It may be useful for someone who does not have much home equity but has other property to protect.
There is no single answer. It depends on what you own. Wisconsin may work better if you have a lot of equity in your home because its homestead exemption is higher.
The federal system may work better if you have little home equity and need more protection for other property.
Before choosing, make a list of your property, what each item is worth, and what you still owe. Then compare how each exemption system would apply.
In Chapter 7, the trustee reviews your property and the exemptions you claim. If an asset is fully protected, the trustee may have nothing to sell. If some value is not protected, the trustee may be able to sell the property if enough money would be left for creditors.
The trustee also considers loans, liens, exemptions, and the costs of selling the property.
When you file, you must list your property, debts, income, and exemptions. The Wisconsin bankruptcy process includes these requirements.
Chapter 13 usually lets you keep your property while you make payments under a court-approved plan.
Exemptions still matter. If you have property that would not be protected in Chapter 7, that value can affect how much you must pay to unsecured creditors through your Chapter 13 plan.
Many retirement accounts have strong protection in bankruptcy. But the rules depend on the account type.
Federal law also protects many qualified retirement plans. Traditional and Roth IRAs have a federal bankruptcy limit of $1,711,975 under the current limits. Other retirement accounts may have different rules.
If you have several types of retirement accounts, check the rules for each one before filing.
Wisconsin’s homestead exemption can protect up to $75,000 in qualifying equity for one owner. If both spouses qualify and own the home together, each may be able to claim an exemption.
Often, yes. Wisconsin has a motor vehicle exemption of up to $4,000 in equity. Other rules may also help protect part of the vehicle’s value.
Wisconsin provides an exemption of up to $5,000 for qualifying personal bank deposits.
No. If you can choose between the two systems, you normally must choose one system rather than mixing them.
No. An exemption can protect your property or equity from creditors. It does not cancel a mortgage, car loan, or other valid lien.
Choosing the right exemptions can affect what you keep when you file for bankruptcy. Reviewing your assets, equity, and available exemptions ahead of time can help you understand what to expect and avoid problems during the case.
If you are considering bankruptcy, contact us for a free consultation. We can review your situation and help you understand your options before you file.
Learn about bankruptcy protections, types of bankruptcy, how to get started, what to expect, and who to trust. Filing bankruptcy is the ONLY way to completely eliminate debt. If bankruptcy is right for you, it offers powerful protections that cannot be achieved through alternative solutions such as hardship relief, loans, or debt settlement.
