Q:
What is Chapter 128? Is it something I should consider over Chapter 7 or Chapter 13 bankruptcy?
– Josh in Waukesha

A:

Since 1982, multi award winning attorney Todd C. Esser has been leading the field, serving the community, and helping consumers just like you achieve success through trying financial times.

Since 1982, multi award winning attorney Todd C. Esser has been leading the field, serving the community, and helping consumers just like you achieve success through trying financial times.

As a resident of Wisconsin, you enjoy a unique option when it comes to getting your debts under control. You won’t have to file tax returns, get credit counseling or even go to court. Chapter 128 allows you to organize your debt without filing bankruptcy.

Chapter 128 proceeding is NOT a bankruptcy proceeding. Chapter 128 is a provision under Wisconsin Statutes, not the federal bankruptcy code. Under a Chapter 128, or debt amortization plan, as it is often referred, an individual wage earner is allowed to select certain debts to include as part of a court supervised plan to be paid without interest over a term or up to 3 years. The debt must be paid in full, but it is paid back without interest. At the conclusion of the plan, the court issues an order determining that the debt has now been satisfied in full. There is no discharge. On the other hand the person filing the Chapter 128 case is protected from wage garnishment by the creditor or creditors that are included as part of the repayment plan.

Chapter 128 is a very effective tool for individuals who may be in a circumstance where they are not able to live up to the payments required by the creditor; but who could afford to pay if given more time. For instance, if an individual has taken out a payday or check cashing type loan, often times loan payments are scheduled weekly or bi-weekly and can include repayment terms or 500% to 750% interest! Under Chapter 128, that loan could be paid back under the court supervised plan without further addition of interest after the date of filing. This can amount to a huge savings for the individual and peace of mind knowing that the individual’s wages are protected from execution or garnishment. Chapter 128 is not effective in dealing with secured claims. That is, debts that are secured by a lien on property. For instance, if someone borrows money from a title loan company and pledges their car as collateral for the loan, Chapter 128 would not protect the creditor from repossessing the car or other pledged collateral. In that circumstance, it may be better to pursue a Chapter 13 Bankruptcy in order to obtain the federal bankruptcy court automatic stay protecting the vehicle from repossession.

The important thing is that you are taking the first step towards becoming debt free.

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