Exempt Funds Protection in Wisconsin
Wisconsin tracks the federal CCPA for wage exemptions (80% earnings (stricter than CCPA)). Federal 42 U.S.C. 407 fully protects Social Security and SSDI funds; the Treasury 2-month rule auto-protects two months of SSA deposits from any levy.
| Income Source | Wisconsin Protection |
|---|---|
| Social Security / SSDI | Fully exempt (42 U.S.C. 407) |
| Wages (state floor) | 80% earnings (stricter than CCPA) |
| Head-of-household boost | HOH protection via homestead |
| Levy protest deadline | 10 days (exemption claim) |
42 U.S.C. 407 + Wis. Stat. 815.18 state mirror
42 U.S.C. 407 -- Federal SSA Protection
Section 407 of Title 42 of the U.S. Code provides absolute protection for Social Security and SSDI benefits: "none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process." This protection applies in every state, including Wisconsin.
The protection applies to:
- Social Security retirement benefits
- Social Security disability (SSDI)
- Supplemental Security Income (SSI)
- Survivors' benefits
- Auxiliary benefits (for dependents)
The Treasury Department's 2011 rule (31 CFR Part 212) requires banks to automatically protect up to 2 months of federal benefit deposits when a levy arrives. Treasury 2-month rule applies.
State Wage Exemptions in Wisconsin
After wages hit your bank account, the separate bank-account exemptions apply. In Wisconsin: 80% earnings (stricter than CCPA).
HOH protection via homestead
Critical practice point: the wage exemption protects earnings "in the hands of the employer," but once they deposit into your checking account they become "funds" rather than "wages." Some states preserve wage-exempt status for a limited period after deposit; others do not. Check your Wisconsin rules before assuming deposited wages retain garnishment protection.
Head-of-Household Exemption in Wisconsin
HOH protection via homestead
Where head-of-household status applies, the protection can dwarf the federal CCPA floor. The classic example is Florida: a head of family earning under $750/week is fully exempt from wage garnishment for consumer debt. Missouri caps head-of-family garnishment at 10% rather than 25%. Nebraska's 85% HOH protection is also notable.
To claim HOH status in most states, you must:
- Provide more than half the support of a dependent living in your household, and
- File a sworn affidavit or claim of exemption with the court (timing varies by state).
Levy-Protest Procedure in Wisconsin
Deadline: 10 days (exemption claim). File Wis. Stat. 812.37 claim; bank releases on court order.
The Wisconsin stop-levy checklist:
- Identify the source of funds. SSA/SSDI? Wages? Child support? Tax refund? Each has different protection.
- Gather documentation. Deposit slips, pay stubs, SSA award letters, dependent documentation for HOH claim.
- File claim-of-exemption. Use the form specified in File Wis. Stat. 812.37 claim; bank releases on court order. above.
- Request hearing. Most courts set a levy-protest hearing within 7-14 days.
- Serve the bank. Once the court orders release, serve the order on the levying bank.
The Treasury 2-Month SSA Rule
Treasury 2-month rule applies.
When a bank receives a levy, it must "look back" 2 months at direct-deposit records. If any federal-benefit deposit (Social Security, SSI, VA, federal retirement) arrived during that window, the bank must automatically exempt up to 2 times the monthly deposit amount. This rule is self-executing -- the bank does it without a court order.
Common failures:
- Benefits paid by paper check rather than direct deposit -- not auto-protected.
- Commingling SSA with other deposits -- the 2-month protection is calculated on SSA inflow only.
- Account in a third person's name -- the rule follows the SSA beneficiary.
If your bank froze an SSA-funded account and did not apply the Treasury rule, file a complaint with the CFPB and demand immediate unfreeze.
Wisconsin Federal Bankruptcy Data
When levy-protection fails administratively, bankruptcy's automatic stay halts the levy within 24 hours. These FJC numbers show how Wisconsin debtors use the bankruptcy remedy.
Numbers below come from the Federal Judicial Center Integrated Database covering 1,541 consumer bankruptcy cases from Wisconsin's federal bankruptcy courts.
| Chapter | Cases Filed | Discharge Rate | Dismissal Rate |
|---|---|---|---|
| Chapter 7 | 953 | 99.4% | 0.4% |
| Chapter 13 | 588 | 48.1% | 51.9% |
Rates computed on resolved cases only. Source: FJC Integrated Database.
How Bankruptcy Stops a Wisconsin Levy Immediately
The bankruptcy automatic stay under 11 U.S.C. Section 362 halts all levies within 24 hours of filing. For Wisconsin debtors facing a bank-account levy:
- Chapter 7 filing triggers the stay; typical discharge in 90 days.
- Chapter 13 filing same stay; 3-5-year reorganization plan.
- Preference clawback under 11 U.S.C. Section 547 may recover levied funds if total exceeds $600 within 90 days before filing.
- Exemption claim under 11 U.S.C. Section 522 protects account balance up to Wisconsin exemption caps.
See 1328(f) refiling screener, Wisconsin means test, and levy prevention strategies.