Some people facing serious debt are reluctant to file for bankruptcy. Individuals may be afraid of the effect filing for bankruptcy could have on their credit, or they could have another personal reason for shying away from the bankruptcy process.

The good news is that bankruptcy isn’t the only debt solution available for Wisconsin residents. In fact, many people in Milwaukee County and the rest of the state are taking advantage of a little-known bankruptcy alternative that involves petitioning for Chapter 128 protection.

As we discussed in an article on our website, Chapter 128 protection allows petitioners to create a three-year repayment plan that involves paying back all creditors using a single, affordable monthly-payment. In some ways, petitioning for Chapter 128 protection is similar to bankruptcy or debt consolidation, but it’s truly a unique option.

How Chapter 128 protection differs from bankruptcy:

  • The Chapter 128 process is much simpler than the bankruptcy process; however, it does not offer all of the same benefits as bankruptcy.
  • Chapter 128 protection usually does not have the same negative effect on a person’s credit report as bankruptcy does.
  • Unlike bankruptcy, Chapter 128 protection does not require the petitioner to declare all debts, assets and income.
  • Chapter 128 protection also does not require the petitioner to go to court, participate in credit counseling or submit tax records.
  • While a Chapter 7 bankruptcy discharge can only be granted once every eight years, Chapter 128 protection can be used repeatedly.

As mentioned above, bankruptcy provides benefits that are not possible through Chapter 128 protection, including the reduction or elimination of debt. That’s why it’s very important to meet with an experienced bankruptcy lawyer who can compare all of the options available and help you reach a solution that’s right for your situation.