Tuesday, June 14, 2016

Debt Consolidation in Wisconsin: Chapter 128

What are the differences between Chapter 128 and bankruptcy?

Chapter 128 is an old, but still relatively unknown, alternative to bankruptcy available to the people of Wisconsin. It is a voluntary debt consolidation plan that works through the Wisconsin Circuit Court system and has elements that distinguish it from both consumer credit counseling plans and bankruptcy.

Differences between Chapter 128 and Bankruptcy

There are two major distinctions between Chapter 128 and bankruptcy. The first is that bankruptcy is federal and Chapter 128 is strictly limited to the State of Wisconsin. The second is that Chapter 128 enables you to pay your debts through consolidation, not erase them through bankruptcy

Did the Federal Government's overhaul of bankruptcy laws affect Chapter 128 proceedings?

No. The overhaul of bankruptcy laws by the Federal Government, which took effect in October 2005, did make it considerably more difficult to file for bankruptcy. Nonetheless, this overhaul did not affect Chapter 128 proceedings. As a matter of fact, it may have made Chapter 128 more appealing to debtors since those who do not qualify for bankruptcy may still be able to file Chapter 128 to resolve their debt problems.

Advantages of Chapter 128

   There are a number of advantages to filing Chapter 128, including:

  • Chapter 128 is unique to the State of Wisconsin and open to all Wisconsin residents
  • Chapter 128 does not require you to list your assets so your property in not in jeopardy
  • Chapter 128 does not require you to list all of your debts
  • Chapter 128 stops garnishments of wages
  • Under Chapter 128, your debts actually get repaid
  • Unlike bankruptcy, Chapter 128 filings are not publicized by being listed in the newspaper
  • Chapter 128 postpones interest payments until the process is complete
  • Chapter 128 is easy and inexpensive to file
  • You may file more than once for Chapter 128
  • Chapter 128 does not require any court appearances

The convenience and low cost make Chapter 128 an attractive alternative to many debtors, particularly those who are not eligible for more typical bankruptcy filing.

How does Chapter 128 Work?

Chapter 128 filing is a simple procedure. Not only is it inexpensive, but it can be done through the mail. A trustee totals up all he debts the debtor wants included, adding his or her fee (usually 7 to 10 percent) and an attorney's fee as well, and divides that number by 36, representing the three years worth of months involved in the process. The debtor than sends the appropriate amount of money to the trustee each month and the trustee pays prorated amounts to each of the creditors. In general, creditors prefer Chapter 128 to bankruptcy because they get paid something rather than nothing in a relatively timely manner.


If you are confronting overwhelming debt in the State of Wisconsin, there are several paths open to you to resolve your problems. Your best bet is to consult with a knowledgeable, highly skilled bankruptcy attorney who will be able to inform you of all possible options, help you understand which one is best for you and why, and to assist you as you proceed.


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