When a person is considering whether to file for bankruptcy, one of the main concerns likely relates to the family home. For many, a significant amount of money is invested in their home in the form of equity. However, as part of bankruptcy, the court will consider the full range of assets in determining how to approach paying off debts.
Luckily, the State of Wisconsin has a law that helps protect the family home during the bankruptcy process. Known as the homestead exemption, this law will keep up to $75,000 of equity in a home away from creditors for an individual. In addition, if a married couple is filing for bankruptcy together, the amount doubles to $150,000. The exemption also applies to the property around the home – from a quarter of an acre up to 40 acres.
There are some important nuances to the rule, however. For example, it uses a definition of “exempt homestead” to include a multitude of property types, including condos, manufactured trailers, mobile homes and even co-ops. The rule recognizes that there are a number of technically different properties that people call “home” in Wisconsin, which is good news for state residents. Also, the amount of investment protected by the exemption is available even if a property was sold, as long as the filers have the intent to purchase a new home within the 2 years following the sale.
Making the decision to file for bankruptcy is never one to take lightly, but the law does try to provide some protections aimed at limiting the difficulties that come with the process. One of the important ways of protecting your valuable assets is the homestead exemption, but there are many other nuances to the process that can be best addressed by seeking guidance from an experienced legal professional.