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Debt Amortization

A Bankruptcy Alternative

If bankruptcy is too drastic a remedy, you can consolidate some or all of your unsecured debts, stop interest on those debts and stretch out payments over three (3) years with a Chapter 128 Debt Amortization plan.

What is Chapter 128?

As a resident of Wisconsin, you have a unique option when it comes to getting your debts under control. Wisconsin State Law provides a means of debt repayment without having to file a bankruptcy. This option is called a Chapter 128 Debt Amortization. The person filing is protected from wage garnishment by the creditors included in the plan. The Court will appoint a Trustee to oversee the repayment plan; the Trustee will collect the payments and send them to the creditors. The Court will also issue an Order that makes creditors such as credit cards, medical, payday loans, rent, utility and civil judgments accept a monthly payment over a period of up to 3-years.

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How Chapter 128 Works

A debtor filing Chapter 128 fills out a simple petition to reorganize debts and an affidavit listing the debts he or she wishes to include. Chapter 128 covers unsecured debts such as credit cards, payday loans, speeding tickets, medical bills, late utility bills and rent payments. Debtors may not include secured debts such as mortgages and car loans. The debtor also needs to assert in the affidavit that he or she will make regular payments over the course of up to three years.

With the help of a trustee, the debtor makes a repayment plan by totaling the debts plus the trustee’s fees and dividing by 36 to get a monthly repayment amount. The debtor submits the petition, affidavit and repayment plan to the court in the county in which he or she lives and the court will issue a protective order preventing interest from accruing on the debts, wage garnishment or asset attachments by creditors and utility shut-offs.

The debtor authorizes a wage order for regular monthly payments to the trustee. If a debtor fails to complete the repayment plan, he or she is liable for the interest that accrued during the time the plan was in effect and creditors are free to recommence collection actions.

How Chapter 128 Differs From Bankruptcy

There are some key differences between filing Chapter 128 and filing bankruptcy. When a debtor chooses to file Chapter 128, he or she does not need to declare all debts, assets and income as in bankruptcy. Additionally, a debtor going through Chapter 128 need not produce tax records, file income tax returns, go through mandatory credit counseling or go to court. A debtor may file Chapter 128 repeatedly, unlike limitations in bankruptcy law on the amount of time that must pass before a person may file again. A Chapter 128 does not affect a credit report like a bankruptcy does, although some have reported a slow pay on the debts listed due to the timing of how payments are collected and then submitted to the creditors.

While the process for filing Chapter 128 is far simpler than filing bankruptcy, Chapter 128 does not offer all of the benefits of bankruptcy. Chapter 128 plans cannot reduce or eliminate debt in the same way that a debt discharge under bankruptcy can. People using Chapter 13 bankruptcy may end up paying only a fraction of what they owe and those filing Chapter 7 may pay nothing on certain debts. Those using Chapter 128 are still responsible for the full amount they owe.

Trying to decide between filing bankruptcy or a bankruptcy alternative such as Chapter 128 can be confusing. If you are considering filing bankruptcy, talk with a lawyer to see if that is the right option for you or if a bankruptcy alternative may be more appropriate for your situation.

Contact Burleson Legal Group Today

The first step toward your financial fresh start is to call or e-mail us today. You will speak with a down-to-earth and experienced debt relief attorney who will lay out your options in an easy-to-understand manner. The consultation itself doesn’t take long and it is free. We look forward to hearing from you today!