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Chapter 128 can be a good bankruptcy alternative in Wisconsin

A compelling financial situation may force a person to borrow money from banks or other financial institutions. However, this may further complicate the financial standing of that person in the event of non-payment. A person may face harassment from creditors in the form of threatening phone calls on a daily basis, or debtors knocking at the borrower's door and making the debtor's life difficult.

There are federal provisions available that can help a debtor get out of financial difficulties by filing for bankruptcy. However, for Wisconsin residents there is an obscure state provision that has existed for many years that is easy, inexpensive and advantageous for creditors as well as debtors. A person can file for debt relief under Wis. Stat. section 128.21 in a court, which appoints a trustee to ensure that payments are made on time per court orders in monthly installments not to exceed 36 months.

Although the state law technically cannot be termed Section 128, it is widely used by this label. Filing under section 128.21 can be very effective for those Wisconsin residents who are finding it tough to keep their debt under control and could pay off their debt if the accrual of interest were halted and the debt repayment was divided into installments. Once the statute is engaged, the accrual of interest is halted immediately and listed creditors cannot attach a creditor's property or garnish the debtor's wages. It also gives a debtor many of the same protections from creditors that the person can obtain by filing for bankruptcy relief. However, unlike under personal bankruptcy provisions, a debtor filing under this provision must pay all debts included in the plan.

Unlike a bankruptcy provision, a debtor does not need to submit schedules of property, or personal finances, or go through mandatory counseling under this provision. A debtor simply needs to file a petition to amortize debt with the filing fee in a county's circuit court where the person resides.

It can be filed by any adult Wisconsin resident who has a principal source of income from wages or salary. It can even be filed by those who do not have a conventional source of income. It can also be filed jointly by a husband and wife. A debtor can get relief under this provision for nearly any kind of unsecured debt.

Source: WisBar.org, "Chapter 128: Wisconsin's Bankruptcy Alternative," Accessed on Nov. 20, 2014

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