Comment: Current research uncovered this program relating to Wisconsin residents who wish to avoid bankruptcy court. Not sure where it fits in foreclosure. Informative, to be sure….
WHAT IS CHAPTER 128?
Chapter 128 gets its name from the Wisconsin state statute it falls under, 128.21. The main purpose of Chapter 128 is to repay debt without filing bankruptcy. It is NOT a consumer credit counseling program, but is a voluntary debt consolidation plan filed with the Wisconsin Circuit Courts, with documents prepared by an attorney.
CHAPTER 128 vs. BANKRUPTCY
There are two major differences: Bankruptcy takes place in Federal Court. Chapter 128 is strictly a State of Wisconsin plan. Also, Chapter 128 is the opposite of bankruptcy; you are repaying the debts.
Chapter 128 proceedings may make it a much more attractive option to debtors: if you do not qualify or want to file for bankruptcy, you may file a Chapter 128 instead.
The following is a partial list of the advantages of a Chapter 128:
- Is unique to the State of Wisconsin and is open to all Wisconsin residents.
- Unlike bankruptcy, you are not required to list assets and property not in jeopardy.
- You do not need to list all the debts you owe, unlike bankruptcy.
- A very attractive alternative if you do not qualify under the new bankruptcy laws.
- Stops garnishments.
- Debt gets repaid.
- Interest on debts is uncollectible upon successful completion of the Chapter 128.
- Easy and inexpensive to file.
- May file more than once.
- No Court appearances.
WHO NEEDS CHAPTER 128?
If you are burdened with debt and for whatever reason cannot, or do not wish to file bankruptcy, you may qualify for a Chapter 128 voluntary debt consolidation plan. It is open to any resident of the State of Wisconsin as long as you have a steady income that supports such repayment.
WHAT DOES IT COST?
The filing fee is $31.50 in most counties (slightly higher in Milwaukee County). There will also be attorney’s fees which are set by the attorney, not the trustee. The trustee’s fees are a percentage of your total debts and are not an upfront cost but rather are paid out over the term of your plan.
Your attorney will determine the initial payments to the trustee. These payments may change once the creditors have a chance to file a claim indicating the actual amount owing as of the date the documents are files with the court. Because this is a wage earner plan you must be employed and payments to the trustee should be done by wage withholding.
PURPOSE OF A CHAPTER 128
The purpose of filing a Chapter 128 is to pay off debt. The trustee does not repair credit reports and does not provide credit counseling . However, when you successfully complete your plan, you will receive an Order from the Court which you will use to clean up any problems remaining on your credit report.
HOW LONG IS THE PLAN?
Chapter 128 plans are 36 months by statute. However, you may be able to pay off your plan early with larger payments.
WHAT DEBTS CAN I INCLUDE?
Generally, medical bills, credit cards, check cashing stores, personal loans (without co-signers) and most other miscellaneous bills may be included.
WHAT DEBTS CANNOT BE INCLUDED?
Debts with collateral cannot be included, which includes car/motorcycle loans, and mortgages. Co-signed loans, taxes, child support, and student loans may not be included. A recent court order has declared that filing a Chapter 128 alone does not stop a utility company from disconnecting service and it does not require a utility company to reconnect service.
WHO CAN FILE?
Any employed Wisconsin resident. If married, it must be filed by both husband and wife.
HOW DO I FILE A CHAPTER 128?
Chapter 128 plans are filed through an attorney, as these are legal proceedings. The attorney will review your situation to determine if you qualify for the plan. He or she will examine your debt situation, explain the plan, prepare and submit the required documents with the Court and communicate with the trustee.