Wisconsin's Chapter 128: Bankruptcy Alternative

Jul 08, 2014

Chapter 128

The phone is ringing and your creditors want the money owed to them right now. You want to pay your debt but unfortunately it is going to take time and with the mounting interest, it is hard to see a way out. You have tried to set up a payment plan but they want more than you can afford per month. Is bankruptcy your only option? The State of Wisconsin helps residents in this very scenario through a Chapter 128 bankruptcy alternative.


What is a Chapter 128

A Chapter 128 is a debt repayment program that is ordered by the court, legally called a Section 128.21. This means creditors included in the Chapter 128 are required to accept your smaller payments through the program. The repayment program can be up to 36 months or less at 0% interest. That is ZERO percent interest; you won’t get that with a consolidation loan!! The court appoints a Trustee to receive and distribute your payments and work directly with the creditors on your behalf.


Advantages of Chapter 128

Section 128 can stops garnishments and prevent future garnishments.

All collection calls and letters are required by law to stop.

Interest, penalties and late payments can no longer be charged to your debts once included in a Chapter 128.

Debt is paid back in a period of no more than 3 years. If able, you can choose to have a shorter plan.

You are not required to list all of your debts; you can pick and choose what debts to include.

No hearing is required.

Attorney fees are less expensive than a bankruptcy.


Disadvantages of Chapter 128

The debts must be repaid 100%.

In order to file a Section 128 you need to have steady income.

You cannot include secured debts, such as home or auto loans.

Chapter 128 cannot stop utility shutoff, however you are able to repay old utility bills.

Section 128 will negatively affect your credit, however, less than a bankruptcy would.

For their services, the Trustee charges a fee of 7% to 10% of the total debt.


What Debts Can Be Included

Credit card bills

Medical bills

Payday loans

Money Judgments

Debts placed with collection agencies

Some past due utility bills

Post vehicle repossession debt

Wisconsin Income Taxes


Conclusion

Section 128.21 is not known by many and is only offered in Wisconsin. It has recently gained interest from individuals who are looking for debt relief but not to the extent of bankruptcy. Even though it doesn’t offer all the benefits of bankruptcy, it is a great alternative to help pay down your debt and eliminate the interest. If you would like to find out if a Section 128.21 is right for you, contact us. Here at Pedersen Law Office we have free consultations in all our areas of practice, including debt relief. We can meet with you in either our Appleton area or our Green Bay office. Take advantage of our free overview of your financial situation to see if a Chapter 128 is right for you!




Category: Bankruptcy

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