Wisconsin Section 128 vs Debt Management Plans

Sep 26, 2018


When your debt becomes more than you are able to pay each month, it’s time to see what options are available to help you get out of debt. Getting your debt under control before it becomes impossible to repay is advantageous. A debt management plan is one way many try to get debt under control. However, in the State of Wisconsin, there is another option called a Wisconsin Section 128.21.


A section 128, sometimes called a Chapter 128, is a debt repayment program that is ordered by the Wisconsin State Court. It combines several debts into one payment at zero percent interest. The court orders the creditors you put into your Section 128 to participate, which means they have to stop all interest from accruing and to stretch out the payments over a 3-year period. The creditors that you have listed in your Section 128 are no longer allowed to harass you for payment, and instead, get their payments from the Trustee appointed to your case. Creditors listed in the Section 128 are not allowed to garnish your wages. If they are already garnishing your wages, they have to stop garnishing once the Section 128 is filed.


Debt management plans combine several creditors into one monthly payment. The company you hire works with your creditors on your behalf to reduce your monthly payments by negotiating a lower interest rate or extending the amount of time to pay off your debts. An agreement is made for a payment plan that pays off your debts in a 3 to 5 year period. Basically, they help make your monthly payment more manageable by getting a lower interest rate or by stretching out the repayment time-frame. Debt management plans can do just that, help manage your debt.


Both a Section 128 or a debt management plan will likely benefit your financial situation. However, only the Section 128 can legally stop a garnishment from taking 20% of your gross income. A debt management plan cannot stop a garnishment. Also, the Section 128 repays your debts at 0% interest. No matter how hard your debt management company negotiates, they won’t be able to get you a 0% interest rate. Additionally, the Section 128 is a repayment program through the State of Wisconsin court system and it is court ordered that your creditors follow it. A debt management plan is voluntary and your creditors do not have to participate in it. Also, not all debt management companies are reputable. There are debt management companies and plans that do not pay nearly enough money to your debts each month, which prolongs the process and significantly reduces your cost savings. Finally, debt management plans can typically only help with credit cards and some personal loans. The Section 128 can help with a wide variety of debts:


Overdue Utilities

Credit Cards

Signature Loans

Payday Loans

Money Judgments

Medical Bills

State of Wisconsin Fines

Wisconsin Child Support

Wisconsin State Taxes


If you are falling behind on your bills and need debt relief, give our office a call. We can let you know if a Section 128 is right for you and give you an estimate on what your payments would like it. Pedersen Law Office, LLC offers free consults in all of our areas of practice and will meet with you personally to discuss your specific circumstances and see what options are available for you. Our law office serves the communities of Appleton, Neenah, Menasha, Oshkosh, Green Bay and their surrounding areas.

Category: Bankruptcy

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