Anyone considering filing for bankruptcy—whether in Wisconsin, Illinois, or otherwise—should be aware of Homestead Exemption, and understand the law as it applies to the state in which they live. As Beloit bankruptcy lawyers and Rockford bankruptcy lawyers, we cannot stress enough how varied this particular law can be from state to state—the specifics will depend greatly on where you live.
Why is Homestead Exemption Important?
Homestead Exemption exists, principally, as a means to protect your primary residence during bankruptcy. Essentially, the exemption prevents creditors from placing a lien (keeping possession of your property until the debt is discharged) on any equity you have in your residence.
Let’s say, for example, that your home is worth $300,000. You’ve already paid $75,000 of your original mortgage balance, giving you a $75,000 equity ownership of the house. In Wisconsin, as a single individual, that 75K is safe from the bankruptcy trustee to use to pay your creditors.
To What Can I Apply Homestead Exemption?
It’s important to remember that Homestead Exemption is only applicable to your primary residence, but ‘residence’ includes:
- Mobile home
- Co-op or unincorporated Co-op
- Mobile home
- Sale proceeds from personal or real property for up to one year from the date of sale
Again, given the specifics of the law to each state, it’s important to seek the counsel of an experienced attorney to find out whether your property is included.
Do I Need to File an Additional Declaration in Order to Qualify?
Unlike other states, in Wisconsin and Illinois the Homestead Exemption goes into effect upon filing for bankruptcy—there’s no need to file a homestead declaration.
What’s the Difference Between Wisconsin Homestead Exemption, Illinois Homestead Exemption, and Federal Exemption?
The exemption limits differ greatly from Wisconsin to Illinois. They are as follows:
- $75,000 for an individual
- $150,000 for a married couple
Illinois 735 ILCS 5/12-901
- $15,000 for an individual
- $30,000 for a married couple
Also, Wisconsin is unique from Illinois in that Wisconsin allows residents to use the exemptions provided under Wisconsin Law OR the Federal bankruptcy code. (However, you cannot mix and match elements from both codes.) Federal Exemption Limits are as follows:
Federal 11 U.S.C. 522(d)(1)
- $21,625 for an individual
- $45,250 for a married couple
Seek Counsel from an Experienced Bankruptcy Attorney
Homestead Exemption is a valuable but complicated law, the specifics of which vary depending on where you live.
If you are considering bankruptcy and live in south-central Wisconsin or northern Illinois, be sure to speak to an experienced Beloit bankruptcy attorney or Rockford bankruptcy attorney to learn how you can benefit from Homestead Exemption.
If you’d like to learn how The Fitzgerald Law Firm can help protect your home’s equity during bankruptcy, contact us for a free consultation.
Image courtesy of Moyan_Brenn.