Sign In
  • InsideTrack
  • September 09, 2009

    Bills proposing higher property exemption levels moving in legislature

    Cale Battles

    Sept. 9, 2009 – Four bills are currently pending in the Wisconsin Legislature that would provide a long-overdue inflation correction to various property exemptions in Wisconsin. Exempt property is property that individuals can keep from execution (seizure) by judgment creditors or a bankruptcy trustee. Debtors are not allowed to exempt property from mortgages, voluntary security interests or statutory or tax liens, only the debtor’s equity in property (above the mortgage) is considered when applying the exemption.

    Representative Gary Hebl and Senator Lena Taylor have introduced Assembly Bill 189 and Senate Bill 160, both of which would increase the homestead exemption from $40,000 to $75,000. Assembly Bill 387 and Senate Bill 259, also introduced by Representative Hebl and Senator Taylor, increases the value of various forms of property that are exempt from execution.

    Wisconsin exemptions are currently found under Wis. Stat. § 815.18-815.20. The stated purpose for these provisions is: “to advance the humane purpose of preserving to debtors and their dependents the means of obtaining a livelihood, the enjoyment of property necessary to sustain life and the opportunity to avoid becoming public charges.”

    The State Bar’s Board of Governors, at the request of the Bankruptcy, Insolvency, and Creditors Rights Section, supports these revisions. The homestead exemption was last revised in April 1986, when it changed from $25,000 to the present $40,000. Non-homestead exemptions were last revised in the late 1980s, at which time it was anticipated that the amount would be revisited to keep pace with inflation. That has not taken place.

    Dollar amounts under the federal Bankruptcy Code exemptions are revisited every three years based on changes in the consumer price index. Those were last adjusted in 2007.

    The property exemptions changed under the bills noted above would include:

    • Increase the homestead exemption from $40,000 to $75,000;
    • Increase the business/farm property exemption from $7,500 to $15,000 and add a provision to exempt debtor’s interest in a closely held business entity;
    • Increase the consumer goods exemption from an aggregate of $5,000 to an aggregate of $12,000;
    • Increase the motor vehicle exemption from $1,200 to $4,000; and
    • Increase the personal injury award exemption from $25,000 to $50,000 and clarify that it is per claim.

    All Wisconsin exemptions, with the exception of the homestead exemption, can be doubled for a married couple. The homestead exemption cannot be doubled for a married couple, which creates a “marriage penalty”. Attorneys have said that this penalty has lead to couples divorcing to be able to keep their home from a judgment creditor. AB 387/SB 259 would eliminate the “marriage penalty” by allowing married couples to stack their homestead exemptions. Assembly Bill 387/SB 259 would mirror the federal exemptions by indexing the homestead exemption every three years.

    Assembly Bill 189 and Senate Bill 160 have been reported out of each house’s respective committees and await floor action. Assembly Bill 387 has been referred to the Committee on Judiciary and Ethics, which is chaired by Representative Gary Hebl.

    Representative Hebl has proposed an amendment to Assembly Bill 387 that would mirror the change in Assembly Bill 189 by increasing the homestead exemption to $75,000. The amendment would also eliminate the indexing provision and increase the depository account exemption from $1,000 to $5,000. The amendment and bill passed out of committee by an 8 to 1 vote.

     

    Cale Battles is the Government Relations Coordinator for the State Bar of Wisconsin.

     

    Continue to monitor WisBar.org and visit the State Bar’s Government Relations page for updated legislative information.


    RotundaReport

    Rotunda Report is a new newsletter, issued once every two weeks, from the State Bar of Wisconsin that highlights legislative, judicial and administrative developments that impact the legal profession and the justice system. It is produced by the Bar’s Government Relations Team and is distributed free to attorneys, public officials and others who help shape public policy in Wisconsin. We invite your suggestions to make the Rotunda Report more informative and useful and we encourage you to visit our Web site for the most current information about justice-related issues.

    © 2009, State Bar of Wisconsin


Join the conversation! Log in to comment.

News & Pubs Search

-
Format: MM/DD/YYYY