Chapter 128 Bankruptcy Alternative

Chapter 128 is a bankruptcy alternative that is specific to the state of Wisconsin. Under Chapter 128, a 36-month payment plan is used. The plan stops future interest from accruing on most, and can be an efficient way to consolidate debt and get relief from creditor harassment. Additional advantages of a Chapter 128 are that you can use this relief even if you have a high income and/or significant assets, and you can pick and choose which debts to include in the payment plan and which to leave out.

Nicolet Law Office, S.C., can usually arrange for the cost of a Chapter 128 to be limited to a one-time flat fee. Payment plans can be arranged if necessary.

In many ways, a Chapter 128 proceeding is similar to a Chapter 13 bankruptcy; both protect you from creditors and both allow for debts to be repaid. However, there are also many differences between the two, with Chapter 128 being cheaper and offering more flexibility and ease of filing. Bankruptcy generally requires a debtor to submit to credit counseling, pass a means test, and itemize certain personal property and finances, while a Chapter 128 proceeding does not.

A Chapter 128 proceeding begins when you and your attorney complete both a Chapter 128 petition and an affidavit that lists your debts; these documents are then filed with your local circuit court along with a filing fee. When your documents have been filed with the court, an automatic stay will go into effect. In most cases, the automatic stay prevents creditors that have been listed in your filed documents from trying to collect on the debt that you owe them; however, a creditor may bring suit and acquire a judgment on the debt that it is owed by you. Nonetheless, even if a creditor receives a judgment, the creditor is barred from attempting to collect the judgment during the automatic stay. Not only does the automatic stay protect you and your possessions from creditors trying to collect, it prevents them from charging further interest or penalty fees. In most cases, during the automatic stay your debts are effectively frozen, no more interest will be charged on you debt!

After your documents have been filed, the court will appoint a trustee to oversee your proceeding. This trustee will act as a go-between for you, your creditors and the court. The trustee will review the debts you have listed for the proceeding, analyzing the amounts owed, and form a three-year payment plan, concluding how much your monthly payment will be. The trustee will also contact your listed creditors to inform them of your proceeding and to determine if they have any objections to your plan. The trustee will then submit your plan along with reports of his findings to the court; the court will then approve, modify or deny the proposed plan. During this process, a creditor may choose to object to the overall plan, the appointed trustee, or the amount of an alleged debt, necessitating a court hearing.

Once your plan has been approved, you will submit 36 monthly payments to the trustee's office; in turn, the trustee will disburse these payments to your creditors. If a scheduled payment to the trustee is more than 30 days late, the trustee must report the delinquent payment to the court. The court may then determine to dismiss the Chapter 128 proceeding or grant a 30-day extension. If an extension is granted, the trustee will report to the court at the end of it, informing the judge whether you have made the payment or not. At the end of the 36 months (or sooner if you are able and choose to make extra payments), the trustee will report to the court, informing the judge that your debts have been repaid and that the proceeding may be closed.

Contact Nicolet Law Office, S.C., today to discuss your debt relief options. If your income and/or assets are too high for a Chapter 13 bankruptcy, a Chapter 128 proceeding may be right for you!