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This article discusses how to qualify for the homestead exemption in Wisconsin.

This article discusses how to qualify for the homestead exemption in Wisconsin.

Anyone who is considering filing for bankruptcy in Wisconsin should be informed of the Homestead Exemption and how it works in their state.  

Farmers may have asked how a neighbor or another person who has filed for bankruptcy may keep their home. Exemptions are the answer.  

Assets that are exempt from unsecured creditors are known as exemptions.  

What Is the Importance of the Homestead Exemption?  

The fundamental purpose of the Homestead Exemption is to safeguard your primary residence during a bankruptcy. The exemption basically stops creditors from putting a lien on any equity you have in your home.  

What Can I Use the Homestead Exemption For?  

It's vital to understand that the Homestead Exemption only applies to your primary residence, yet the term "residence" include the following in the state of Wisconsin:  

  • Condos  
  • Mobile Homes
  • Co-ops

Is it necessary for me to file a separate declaration in order to qualify?  

In Wisconsin and Illinois, unlike other states, the Homestead Exemption kicks in when you file for bankruptcy; there's no need to file a homestead declaration.  

The Wisconsin homestead exemption allows a debtor to exempt up to $75,000 in equity in their primary residence. If a person owns a $275,000 homestead and has a $200,000 mortgage, the homestead is totally exempt for $75,000 of equity. With a few exceptions, married couples can stack exemptions and safeguard up to $150,000 in home equity through bankruptcy.  

The homestead exemption in Wisconsin can cover up to 40 acres. Bankruptcy filings, on the other hand, are not guaranteed 40 acres. Rather, the homestead exemption is limited to a dwelling and as much surrounding land as is reasonably necessary to use the dwelling as a residence. Farmers may wonder how much surrounding land is required for a dwelling to be used as a residence. A well and septic system are two examples of land on which a well and septic system are located, which are essentials.  

One court determined that a debtor's major source of food must come from the land for that land to also qualify where crops are involved. As a result, if food is purchased at a grocery store, a 5-acre corn field or an acre garden are unlikely to qualify as part of a homestead.  

Likewise, firewood must be the principal fuel source for heating a homestead, according to a bankruptcy court ruling for it to be possible to claim a homestead exemption on wooded land. Wooded land is unlikely to qualify for a homestead exemption unless it is heated primarily with a wood-burning stove.  

One of the prerequisites for obtaining a homestead exemption is that the debtor owns the property. A homestead that is owned by a limited-liability business is not eligible for the homestead exemption. The homestead is owned by a limited-liability business, not the individual debtor.  

The role of marital property is important.  

Non-marital property is something that married couples should be aware of. Wisconsin is a state that recognizes marital property. Individual property refers to assets acquired prior to a marriage. Consider a circumstance in which a married couple lives on a farm that was formerly titled in the husband's name. The title was never changed to include his wife's name. Instead, the property is only titled in her husband's name.  

The real estate is owned solely by the husband. His wife has no equity stake in the company. So instead of two $150,000 homestead exemptions, the married couple is only eligible for one $75,000 exemption. Because only the spouse owns the property, he is the only one who is eligible for the homestead exemption.  

Payment of real estate taxes and insurance with marital cash was also found insufficient to convert individually held real estate into marital property by a bankruptcy court. Taxes and insurance are just maintenance costs that don't add to the value of your home. However, if a real estate mortgage is paid with marital property, the real estate may be turned into marital property, but only to the amount that the mortgage principle is reduced.  

Request a consultation with an attorney. Call our office at (630) 324-6666 or schedule a consultation with one of our experienced lawyers today. You can also fill out our confidential contact form and we will get back to you shortly.

To learn about judgement liens on property in Wisconsin, click here.

Posted 
September 9, 2021
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