Welcome back. Last week we discussed Chapter 7 bankruptcy and Chapter 11 bankruptcy. Today, we will explore Chapter 13 bankruptcy and alternatives to bankruptcy, including Wisconsin’s Chapter 128 Reorganization law.

Like Chapter 11 bankruptcy, Chapter 13 bankruptcy is also a form of legal debt reorganization but it is for individuals who have a regular source of income and might not qualify for a Chapter 7 bankruptcy. It also involves a plan to repay creditors, usually over the course of three to five years.

Chapter 13 makes better sense than Chapter 7 in some cases, especially when a filer has a large asset he or she wants to protect. However, it is much different because from Chapter 7 because the filer does not receive an immediate discharge of debts like in a Chapter 7 filing.

Another benefit of Chapter 13 is that it is effective a stopping garnishments, foreclosures and repossession threats.

As you can see, for a consumer who is in over his or her head with debt, Chapter 7 and Chapter 13 bankruptcy can provide relief. But bankruptcy isn’t always the right choice, either. That’s why Wisconsin residents should consider bankruptcy alternatives such as debt settlement, debt negotiation and Chapter 128 Reorganization before deciding to file.

Under Wisconsin law, Chapter 128 Reorganization is similar to Chapter 13 bankruptcy in that it allows individuals to pay back unsecured debt over a 36-month period; however, the process is much simpler. On the other hand, filing for Chapter 128 Reorganization can be expensive, so it isn’t always the best option.

An experienced bankruptcy lawyer in your area can help explain the different types of bankruptcy available in more detail, as well as bankruptcy alternatives, including those available under state law. As this is an extremely important and complex issue, helpful guidance is a must.

Source: USCourts.gov, “Bankruptcy Basics: Process,” May 9, 2014