Call Now!
Call Us 414-326-9231 608-260-7133 Text Us 414-326-4709

Looking at the homestead exemption in Chapter 7 bankruptcy, P.2

Last time, we looked very briefly at the homestead exemption available under both Wisconsin and federal law. The homestead exemption, as we've mentioned allows a debtor in Chapter 7 bankruptcy to exemption a certain amount of equity in his or her home.

Equity, of course, refers to the amount of ownership interest a debtor has in the residence which exceeds the home's fair market value. Home equity depends on both the amount of the mortgage that has been paid off and the current market value of the home. The question for many debtors contemplating bankruptcy, particularly Chapter 7 bankruptcy, is: will I be able to keep my home?

Generally speaking, those who want to avoid losing their home in bankruptcy should pursue a Chapter 13 filing, which allows a debtor to come up with a repayment plan based on his or her financial situation rather than the value of his or her property. That said, it may be possible for a debtor to keep his or her home in bankruptcy, though this depends on the amount of the homestead exemption and the amount of equity the debtor has in the home.

In cases where the market value of a home is less than the amount of money the debtor owes on the mortgage--in other words, when there is no equity or negative equity--selling the home wouldn't do any good for creditors and the homestead exemption doesn't do any good for the debtor. In cases where the debtor has more equity in the home than is allowed by the homestead exemption, the home may end up being sold, though this does depend on the costs involved in selling.

When the debtor's home equity falls within the homestead exemption, he or she can benefit. Because many seriously struggling debtors do not have equity in their home, though, Chapter 13 bankruptcy will often be a better way to save their home in bankruptcy. Whatever the circumstances of the case, it is important to work with an experienced bankruptcy attorney to receive clear guidance and solid advocacy. 

No Comments

Leave a comment
Comment Information
Email Us For A Response

Free Case Evaluation

* indicates required field

Miller & Miller Law, LLC
  • VISA
  • Master Cards
  • Discover
Milwaukee Office map Madison Office map Kenosha Office map

633 W Wisconsin Ave, Suite 500
Milwaukee, WI 53203

Phone: 414-312-6581
Fax: 414-277-1303
Milwaukee Office

2810 Crossroads Drive
Suite 4001
Madison, WI 53718

Phone: 608-260-7133
Madison Office

6123 Green Bay Road
Suite 210
Kenosha, WI 53142

Phone: 262-326-1669
Kenosha Office

Appleton Office
4321 W. College Ave.
Suite 200
Appleton, WI 54914

Phone: 920-280-3838
Appleton Office

Brookfield Office
200 S. Executive Drive
Suite 101
Brookfield, WI 53005

Phone: 262-261-0665
Brookfield Office

Glendale Office
6001 N. Green Bay Avenue
Glendale, WI 53209

Phone: 414-973-8662
Glendale Office

Fax: 414-277-1303 - We also have offices in Appleton, Glendale and Brookfield to better serve you.