Financial challenges can arise unexpectedly, leaving individuals and businesses struggling to manage debt and creditor demands. In Wisconsin, Chapter 128 and garnishment laws offer avenues for debtors to address their financial obligations while providing certain protections against aggressive creditor actions. Understanding these legal mechanisms is crucial for anyone facing financial difficulties in the state. In this blog post, we'll explore Chapter 128 and garnishments in Wisconsin, shedding light on their purpose, procedures, and implications.

Chapter 128: Debt Adjustment and Garnishment Prevention

Chapter 128 of the Wisconsin Statutes provides individuals with a voluntary, non-bankruptcy alternative for managing their debts. This statute allows debtors to initiate a court-supervised repayment plan to settle their debts over time, while shielding them from certain creditor actions, including garnishments and collection lawsuits.

Key Features of Chapter 128:

1. Voluntary Petition: To initiate a Chapter 128 proceeding, a debtor must file a voluntary petition with the circuit court in the county where they reside or have their principal place of business. The petition outlines the debtor's financial situation, assets, liabilities, and proposed repayment plan.

2. Automatic Stay: Upon filing a Chapter 128 petition, an automatic stay goes into effect, halting most creditor collection actions, including garnishments, foreclosures, and repossessions. This stay provides debtors with breathing room.

3. Court-Approved Plan: Once the petition is filed, the court appoints a trustee to oversee the debtor's financial affairs and work with creditors to develop a repayment plan. The plan  spans three years. 

4. Creditor Acceptance: While creditors have the opportunity to object to the proposed repayment plan, their objections must be reasonable and made in good faith. In most cases, creditors are incentivized to accept the plan rather than pursuing costly litigation.

Garnishments in Wisconsin:

In addition to Chapter 128, Wisconsin law governs the process of garnishment, which allows creditors to collect debts by withholding a portion of the debtor's wages, bank accounts, or other assets. Garnishments may be initiated by creditors who obtain a judgment against a debtor through a lawsuit.

Key Points Regarding Garnishments:

1. Legal Process: Before a creditor can garnish wages or assets, they must obtain a court judgment against the debtor. Once a judgment is secured, the creditor can petition the court for a garnishment order, specifying the amount to be withheld and the source of funds.

2. Exemptions: Wisconsin law provides certain exemptions from garnishment to protect debtors from undue hardship. These exemptions include a portion of wages deemed necessary for the support of the debtor and their dependents, as well as certain government benefits, retirement accounts, and tools of the trade.

3. Notice Requirements: Before initiating a garnishment, creditors must provide debtors with notice of their intent to garnish wages or assets. Debtors have the right to challenge the garnishment by filing an exemption claim or objecting to the garnishment order in court.

Conclusion: Chapter 128 and garnishment laws in Wisconsin offer important protections and options for individuals and businesses facing financial difficulties. Whether through a court-supervised repayment plan under Chapter 128 or navigating the garnishment process, debtors have avenues to address their debts while safeguarding their rights. Consulting with a knowledgeable attorney can provide valuable guidance and support in navigating these complex legal matters and achieving a fresh financial start.

Attorney Nathan DeLadurantey offers free consultations to explain your legal rights in Wisconsin. Free consultations can be scheduled online.