Dec. 3, 2009 – Gov. Jim Doyle recently added his signature to SB 259, creating 2009 Act 80, which increases exemption levels for property that individuals can keep from execution (seizure) by judgment creditors or a bankruptcy trustee. The legislation was introduced by Representative Gary Hebl (D-Sun Prairie) and Senator Lena Taylor (D-Milwaukee) and was supported by the State Bar of Wisconsin.

Wisconsin exemptions currently found under Wis. Stat. section 815.18-815.20, are intended “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.”

Photo: Brent Nicastro.

From left to right: Sen. Lena Taylor, Cindy Lease (Rep. Hebl constituent), Rep. Gary Hebl, Governor Jim Doyle, Leonard Leverson, Claire Ann Resop, and Bruce Lanser.

The State Bar’s Board of Governors, at the request of the Bankruptcy, Insolvency, and Creditors Rights Section, supported the bill. The homestead exemption was last revised in April 1986, when it was increased 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. Until passage of SB 259, no adjustments have been made.

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.

Key provisions of the new law 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;
• Increase the depository exemption from $1,000 to $5,000; 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. Act 80 eliminates this “marriage penalty” by allowing married couples to stack their homestead exemptions.

The effective date of Act 80 will be Dec. 16, which is the day after it is scheduled for publication.

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

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

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