Attorney at Debt Advisors Law Offices
Practice Areas: Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Stop Foreclosure
Filing for bankruptcy is no longer just about listing your home, car, or bank accounts. Today, many Wisconsinites own cryptocurrency, NFTs, or even balances stored in PayPal, Venmo, or Cash App. These assets raise new questions when debt becomes overwhelming.
Understanding how Wisconsin bankruptcy law applies to this property is essential. A Wisconsin bankruptcy lawyer can explain how assets like Bitcoin or online businesses are treated under the law, what needs to be disclosed, and how exemptions may apply.
Debt Advisors Law Offices is a team of bankruptcy attorneys serving Milwaukee, Madison, Kenosha, Sheboygan, Oshkosh, and Green Bay. We’ve seen firsthand how digital property can complicate a case. If you’re considering bankruptcy, knowing the rules before you file can help you protect your future and avoid costly mistakes.
Federal bankruptcy law views nearly everything you own as part of your “estate.” That includes digital property. Under 11 U.S.C. §541, cryptocurrency, NFTs, online balances, and even monetized websites are treated as assets that must be disclosed.
A bankruptcy trustee has the authority under 11 U.S.C. §542 to request turnover of property. If you hold funds in PayPal, a crypto wallet, or a digital marketplace account, you are legally required to report and, if necessary, surrender them for the benefit of creditors.
“Debtors must list all assets, including cryptocurrency, NFTs, and online accounts, in their bankruptcy schedules. Failure to disclose can lead to denial of discharge.” — 11 U.S.C. §521
Transparency is critical. Leaving out digital assets can cause serious problems, including dismissal of your case or denial of discharge.
Cryptocurrency and NFTs are now common in bankruptcy filings. Courts treat them like other property. The challenge is their volatility and the difficulty of tracing them.
If your assets are held in a custodial wallet (like Coinbase or Binance), the trustee can usually access and liquidate them after disclosure. If you use self-custody wallets with private keys, you will need to provide information so the trustee can verify and value your holdings.
NFTs are handled similarly. They are valued at market price at the time of the bankruptcy petition. Even though they may feel unique or personal, NFTs are still assets that must be disclosed.
Wisconsin is one of the few states that allows residents to choose between state exemptions or federal exemptions in bankruptcy. Your choice determines how much digital property you can protect.
The wildcard exemption is significant for cryptocurrency, NFTs, and other non-traditional property. It allows you to shield a portion of assets that don’t fit neatly into different categories.
“Wisconsin bankruptcy filers may choose either state or federal exemptions, which can affect how digital assets are treated.” — Wisconsin Statutes §815.18; 11 U.S.C. §522
| Exemption Type |
Wisconsin State Exemptions |
Federal Exemptions |
| Wildcard | Up to $1,250 plus unused homestead (Wis. Stat. §815.18(3)(p)) | Up to $1,475 + $13,950 unused homestead (11 U.S.C. §522(d)(5)) |
| Motor Vehicle | $4,000 | $4,450 |
| Household Goods | $12,000 aggregate | $14,875 aggregate |
Clearly, this makes planning essential. A person with significant crypto may prefer federal exemptions for broader wildcard protection, while another may benefit from state-specific exemptions.
One of the most complicated issues with digital assets is valuation. Because crypto prices fluctuate daily, bankruptcy courts usually set value at the petition date, which may differ from your purchase price.
Another concern is pre-filing transfers. If you moved crypto to a friend, family member, or another wallet in the 90 days before filing, the trustee may treat it as a preference or fraudulent transfer under 11 U.S.C. §§547–548. That could mean the trustee will attempt to recover those funds. Keeping detailed records of trading history and wallet transfers helps avoid confusion or claims of concealment.
Digital property is not limited to coins or tokens. In bankruptcy, assets such as Venmo, PayPal, or Cash App balances are treated like checking accounts. Trustees may ask for statements at the §341 meeting of creditors.
If you own a domain name, an online store, or a monetized YouTube channel, these are assets with real value. They must also be disclosed and may be liquidated. Some confusion comes from the Wisconsin Digital Property Act (Chapter 711), based on the Revised Uniform Fiduciary Access to Digital Assets Act. This law allows fiduciaries to access digital accounts after death or incapacity. It does not replace the duty to disclose assets in bankruptcy.
The IRS treats digital assets as property for tax purposes. That means every sale, trade, or staking reward has tax implications. Even if you file for bankruptcy, you are still responsible for reporting your activity accurately.
“The IRS requires taxpayers to report digital asset transactions, including receiving, selling, or exchanging cryptocurrency.” — IRS Digital Assets FAQ.
Failing to disclose taxable events can create complications that survive bankruptcy. Accurate records of your crypto and digital activities are essential.
Yes. All digital assets, including crypto, must be disclosed in schedules. Omitting them can result in denial of discharge or allegations of concealment.
Trustees may request information to confirm ownership and value. Cooperation is required to avoid delays or potential disputes during the case.
In some cases. Wisconsin filers can choose state or federal exemptions. The wildcard exemption may help protect some digital assets depending on the total value.
NFTs are valued at market price on the petition date and may be liquidated unless protected by exemptions under Wisconsin or federal law.
Yes. These balances are treated like bank accounts and must be disclosed. Trustees may ask for statements during the bankruptcy process.
The IRS requires disclosure of all crypto transactions for tax purposes. Bankruptcy does not erase the obligation to follow IRS digital asset reporting rules.
Bankruptcy in Wisconsin has evolved to include digital assets such as cryptocurrency, NFTs, and online accounts. Full disclosure, accurate valuation, and strategic use of exemptions are essential in protecting your financial future. While digital assets are a new challenge, the rules are clear: they are part of the bankruptcy estate and must be addressed.
Debt Advisors Law Offices is a debt relief agency. We help people file for bankruptcy under the Bankruptcy Code. Our attorneys understand how Wisconsin and federal laws apply to modern assets and guide clients through these complexities in Milwaukee, Madison, Kenosha, Sheboygan, Oshkosh, and Green Bay. If you’re struggling with debt and hold digital property, the best step is to learn about your options under Wisconsin bankruptcy law.
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.
