Filing Bankruptcy in Wisconsin: Chapters, Exemptions, and Costs

Filing bankruptcy in Wisconsin means choosing between Chapter 7, Chapter 13, or Chapter 11 of the federal Bankruptcy Code, completing a credit counseling course, and submitting a petition to either the Eastern District (Milwaukee) or the Western District (Madison) along with schedules of your income, debts, and property. Wisconsin is one of a minority of states that lets you pick between state exemptions and the federal bankruptcy exemptions to protect what you own, which makes the choice of exemption set almost as important as the choice of chapter.

Which Chapter Fits Your Situation

The chapter you file under decides whether your debts are wiped out quickly or paid down over years.

Chapter 7

Chapter 7 eliminates most unsecured debts, including credit card balances and medical bills, in roughly four to six months. A court-appointed trustee reviews your assets, sells anything an exemption does not protect, and distributes the proceeds. Most Chapter 7 cases are “no-asset” cases where the filer keeps everything because exemptions cover all of their property. You have to pass a means test to qualify.

Chapter 13

Chapter 13 lets you keep all your property while repaying creditors over three to five years under a court-approved plan. You need regular income to qualify, and your unsecured debts must be below $526,700 while secured debts stay under $1,580,125.¹ Chapter 13 is particularly useful if you are behind on mortgage payments, because the plan lets you catch up on arrears over its duration while you keep making regular payments going forward. Once you complete all plan payments, remaining qualifying unsecured debts are discharged.

Chapter 13 also discharges a few categories that Chapter 7 does not, including debts from willful property damage (as opposed to personal injury), debts incurred to pay nondischargeable taxes, and certain obligations from divorce property settlements.² Some filers choose Chapter 13 for that broader discharge even when they qualify for Chapter 7.

Chapter 11

Chapter 11 is designed primarily for businesses that want to restructure debts while continuing to operate. The filer usually stays in control as a “debtor in possession,” running the business while developing a reorganization plan that creditors and the court must approve.³ Individuals whose debts exceed the Chapter 13 limits can use Chapter 11 too, though its complexity and cost make it rare for personal filings.

Do You Qualify for Chapter 7

The means test is the gatekeeper for Chapter 7. It compares your household income over the past six months to the median income for a household of your size in Wisconsin. Below the median, you qualify automatically. Current thresholds:⁴

One earner: $69,343
Two people: $87,938
Three people: $105,734
Four people: $129,964
Each additional person: add $11,100

If your income exceeds the median, the second part of the test subtracts allowed living expenses from your monthly income to calculate disposable income. Significant leftover disposable income creates a “presumption of abuse” that blocks a Chapter 7 filing and steers you toward Chapter 13. The allowed expenses follow IRS standards and include housing, transportation, food, healthcare, and childcare.

What You Can Keep: State vs. Federal Exemptions

Exemptions decide what property survives bankruptcy. Wisconsin lets you choose between the state exemption list and the federal bankruptcy exemption list, but you have to pick one set. You cannot combine items from both.

Wisconsin State Exemptions

The Wisconsin homestead exemption protects up to $75,000 of equity in your primary residence. Spouses filing jointly can each claim a $75,000 homestead exemption.⁵ Other commonly used state exemptions include up to $12,000 for household goods and furnishings, $4,000 for a motor vehicle, and $15,000 for business equipment and tools of trade. Retirement accounts, Social Security benefits, and certain life insurance policies are also protected.

Federal Bankruptcy Exemptions

For cases filed between April 1, 2025, and March 31, 2028, the federal homestead exemption is $31,575, the motor vehicle exemption is $5,025, and the tools of trade exemption is $3,175.⁶ The federal list also includes a wildcard exemption of $1,675 plus up to $15,800 of any unused homestead exemption, which you can apply to any property you choose.

Which List to Choose

In most cases, Wisconsin’s state exemptions are the stronger choice if you have significant home equity or business equipment. The state homestead exemption is more than double the federal amount, and the tools of trade exemption is nearly five times higher. If you rent and do not own a home, the federal wildcard exemption lets you redirect the unused homestead protection toward other assets. That can be a better deal for renters with cash savings or a vehicle worth more than $4,000.

The Two-Year Residency Rule

Under 11 U.S.C. § 522(b)(3), you must have lived in Wisconsin for at least 730 days (two years) before filing to use Wisconsin’s exemptions.⁶ If you moved to Wisconsin more recently, you use the exemptions of the state where you lived for the majority of the 180 days before that two-year window. The rule exists to stop people from moving to a generous-exemption state right before filing.

A separate rule sets where you file. Under 28 U.S.C. § 1408, you file in the federal district where you have lived for the greater part of the 180 days immediately before filing.⁷ Wisconsin has two bankruptcy districts: the Eastern District in Milwaukee and the Western District in Madison.

Steps to File and What It Costs

Before you file anything, you have to complete a credit counseling course from a U.S. Trustee-approved agency within 180 days of filing.⁸ The course runs about 60 to 90 minutes and can be done online, by phone, or in person.⁹ You get a certificate of completion that has to be filed with your petition. Filing without it can get your case dismissed.¹⁰

Then gather your financial records: pay stubs, tax returns for the past two years, bank statements, a list of every debt, and a list of every piece of property you own. This information feeds into the bankruptcy petition and supporting schedules.

Court filing fees:¹¹

Chapter 7: $338 ($245 filing fee, $78 administrative fee, $15 trustee fee)
Chapter 13: $313 ($235 filing fee, $78 administrative fee)
Chapter 11: $1,738 ($1,167 filing fee, $571 administrative fee)

Chapter 7 filers who cannot afford the fee can apply to have it waived entirely. Filers in any chapter can ask to pay in installments.¹² Attorney fees are separate. A straightforward Wisconsin Chapter 7 case typically runs $1,200 to $3,000 in legal fees, and Chapter 13 fees are often higher because of the plan duration.

What Happens After You File

The Automatic Stay

The moment your petition is filed, a federal court order called the automatic stay stops most collection activity against you. Creditors cannot call you, sue you, garnish your wages, foreclose on your home, or repossess your car while it is in effect.¹³ For many filers this immediate relief is the most valuable part of the whole process.

The stay does not stop everything. Criminal proceedings continue. Domestic support obligations continue, meaning child support wage garnishment, tax refund interception for support arrears, and license suspensions for nonpayment of support are not paused.¹³ Divorce proceedings can also continue, except for disputes over how to divide property that is part of the bankruptcy estate. Secured creditors like a mortgage lender or car loan company can ask the court to lift the stay if you are not paying or the property is losing value.

The 341 Meeting

Within 21 to 40 days after a Chapter 7 filing (or 21 to 50 days for Chapter 13), the trustee holds the 341 meeting. Despite the name, creditors rarely appear. The trustee asks you questions under oath about your income, assets, debts, and recent transactions to verify your paperwork. You attend in person or by phone as the court directs, and you need a government-issued photo ID and proof of your Social Security number. The meeting is usually brief when your schedules are complete and accurate.

Debtor Education Course

After filing but before discharge, you have to complete a second course called the debtor education or financial management course. This one is separate from the pre-filing credit counseling. In a Chapter 7 case you file the certificate of completion (Official Form 423) within 60 days after the first date set for the 341 meeting.¹⁴ In Chapter 13 you file the certificate before the final plan payment.

Skip this course and the court closes your case without granting a discharge. You paid the fees, took the credit hit, went through the trustee review, and still owe every dollar. It happens more often than you would expect.

Reaffirmation Agreements

If you want to keep a financed car or other secured property in Chapter 7, you may need to sign a reaffirmation agreement with the lender. The agreement commits you to keep paying the debt as if you never filed, and in exchange the lender does not repossess the collateral. You have 45 days after the 341 meeting to sign and file it. If you have an attorney, your attorney can certify that the agreement does not impose an undue hardship. If you are representing yourself, a judge must approve it at a hearing.

Reaffirmation is voluntary. No creditor can force you to sign one. The risk is real: if you reaffirm and later default, the lender can repossess the property and sue you for any remaining balance, because you gave up the discharge on that debt. Think carefully before reaffirming a debt where the collateral is worth less than what you owe.

Debts That Survive Bankruptcy

Some debts stay with you no matter which chapter you file:²

Child support and alimony. All domestic support obligations survive and keep accruing.
Most student loans, unless you file a separate adversary proceeding and prove “undue hardship.”
Recent tax debts. Income taxes generally must be at least three years past due from the return due date, the return must have been filed at least two years before the petition, and the IRS must have assessed the debt at least 240 days before filing. Anything not meeting all three conditions survives.
Debts from fraud or intentional harm, if a creditor asks the court to declare them nondischargeable.
Personal injury or death caused by driving under the influence.
Court-ordered fines and most government penalties.

Traps to Avoid Before You File

Paying Family or Favored Creditors

The trustee can “claw back” payments or property transfers you made before filing if they gave one creditor an unfair advantage. Payments to regular creditors can be recovered if made within 90 days before filing. Payments to “insiders” like family members, business partners, or corporate officers can be recovered if made within one year before filing.¹⁵ Paying back $5,000 you owe your parents right before filing is a classic example. The trustee can sue your parents to recover that payment and redistribute it among all creditors.

Fraudulent transfers, where you moved assets to someone else to keep them out of creditor reach, can be reversed going back two years under federal law. Some states allow a longer lookback under the Uniform Voidable Transactions Act. The trustee does not need to prove fraudulent intent if the transfer was made while you were insolvent and you received less than fair value in return.

Co-Signers and Joint Debts

If someone cosigned a loan with you, your bankruptcy can put them in the crosshairs. In Chapter 7, the automatic stay only protects you. Your co-debtor has no protection, and creditors can immediately pursue them for the full balance. If a parent cosigned your car loan and you discharge it in Chapter 7, the lender can turn to your parent for the entire remaining amount.

Chapter 13 provides a co-debtor stay under 11 U.S.C. § 1301 that temporarily shields co-debtors on consumer debts while your plan is active. A creditor can still ask the court to lift the stay if your plan does not propose to pay the debt in full, if the co-debtor actually received the benefit of the loan, or if the creditor would be irreparably harmed by the continued stay.¹⁶ If the creditor files a request based on the plan not covering the full debt, the stay lifts automatically in 20 days unless the debtor or co-debtor objects in writing.

Credit Report Impact and Filing Again Later

A Chapter 7 bankruptcy stays on your credit report for 10 years from the filing date. A Chapter 13 stays for seven years. The impact on your credit score diminishes over time as you rebuild with responsible credit use.

If you need to file again, federal law imposes waiting periods between discharges:¹⁷

Chapter 7 after a prior Chapter 7: eight years from the date the earlier case was filed.
Chapter 13 after a prior Chapter 7: four years from the earlier filing date.
Chapter 7 after a prior Chapter 13: six years, unless the earlier plan paid 100% of unsecured claims or at least 70% in a good-faith best-effort plan.
Chapter 13 after a prior Chapter 13: two years from the earlier filing date.

The waiting periods run from the filing date of the prior case, not the discharge date. Filing a new case before the waiting period expires does not stop you from filing. It stops you from receiving a discharge, which defeats the purpose.

1
United States Courts. Chapter 13 Bankruptcy Basics
2
United States Courts. Discharge in Bankruptcy
3
United States Courts. Chapter 11 Bankruptcy Basics
4
United States Department of Justice. Census Bureau Median Family Income By Family Size
5
Wisconsin State Legislature. Wisconsin Statutes 815.20 – Homestead Exemption
6
Office of the Law Revision Counsel. 11 USC 522 – Exemptions
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Office of the Law Revision Counsel. 28 USC 1408 – Venue of Cases Under Title 11
8
United States Bankruptcy Court, District of Columbia. Notice to All Debtors About Prepetition Credit Counseling Requirement
9
United States Department of Justice. Frequently Asked Questions – Credit Counseling
10
United States Department of Justice. Credit Counseling and Debtor Education Information
11
Office of the Law Revision Counsel. 28 USC 1930 – Bankruptcy Fees
12
Legal Information Institute. Federal Rule of Bankruptcy Procedure 1006 – Filing Fee
13
Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay
14
United States Courts. Official Form 423 – Certification About a Financial Management Course
15
Office of the Law Revision Counsel. 11 USC 547 – Preferences
16
Office of the Law Revision Counsel. 11 USC 1301 – Stay of Action Against Codebtor
17
Office of the Law Revision Counsel. 11 USC 727 – Discharge