Debt can feel overwhelming. For Wisconsin consumers struggling with overwhelming financial obligations, Chapter 128 offers a state-specific alternative to federal bankruptcy. While often less discussed than Chapters 7 or 13, it provides a structured repayment plan that can help individuals regain their financial footing.
What is Chapter 128?
Chapter 128 of the Wisconsin Statutes is a debt amortization plan, essentially a court-supervised repayment plan. It allows eligible Wisconsin residents to consolidate their debts and repay them over a period of up to three years. Unlike bankruptcy, Chapter 128 does not discharge most debts. Instead, it aims to facilitate a manageable repayment process.
Key Features and Benefits:
- Protection from Creditors: Once a Chapter 128 plan is confirmed by the court, creditors are generally prohibited from pursuing collection actions like garnishments.
- Retention of Assets: Unlike Chapter 7 bankruptcy, which often involves the liquidation of non-exempt assets, Chapter 128 allows debtors to retain their property as long as they adhere to the repayment plan.
- Tailored to Wisconsin Law: Chapter 128 is specifically designed for Wisconsin residents, reflecting state-specific exemptions and regulations.
Eligibility and Process:
To be eligible for Chapter 128, you must:
- Be a Wisconsin resident.
- Have a regular source of income.
The process typically involves:
- Filing a Petition: You must file a petition with the circuit court in your county of residence, along with a proposed repayment plan and a detailed list of your assets and debts.
- Meeting of Creditors: A meeting of creditors is held, where creditors can review the proposed plan and raise objections. Creditors almost never attend these meetings, nor are the filers/consumers required to attend.
- Court Confirmation: If the court approves the plan, you will begin making payments to a trustee, who will distribute the funds to your creditors.
- Completion of the Plan: Once you have completed all payments under the plan, you will receive a court order stating the debts have been paid.
Important Considerations:
- Not a Debt Discharge: Chapter 128 does not eliminate your debts; it simply restructures them into a manageable repayment plan.
- Legal Expertise: Navigating the complexities of Chapter 128 requires legal expertise. Consulting with a qualified Wisconsin attorney is crucial to ensure your rights are protected and your plan is properly structured.
- Impact on Credit: Like any debt management program, Chapter 128 can negatively impact your credit score.
- Trustee Fees: A trustee will be appointed to manage the plan, and they will receive a fee for their services, which is usually a percentage of the payments made.
Chapter 128 vs. Bankruptcy:
Chapter 128 is often considered a middle ground between Chapter 7 and Chapter 13 bankruptcy. It offers some of the benefits of bankruptcy, such as protection from creditors, without the same level of debt discharge. It is particularly suitable for individuals who want to retain their assets and repay their debts over time.
Seeking Professional Guidance:
If you are a Wisconsin resident struggling with debt, Chapter 128 may be a viable option. It is essential to consult with a qualified attorney specializing in debt relief and bankruptcy law to determine if Chapter 128 is right for you and to guide you through the process. A lawyer can help you understand your rights, assess your options, and develop a repayment plan that meets your specific needs.
Attorney Nathan DeLadurantey offers free consultations to explain your legal rights in Wisconsin. Free consultations can be scheduled online.
