When filing for federal bankruptcy relief, debtors have to go through a fairly burdensome process — they must submit property statements, financial disclosures, go through debt counseling, go through the “means” test to see if they qualify for bankruptcy relief (and, if so, what kind) and struggle to determine what property they can keep under various exemptions.

Chapter 128, by comparison, is a much simpler process. Existing only in state law, it’s a program available to Wisconsin residents who want to pull themselves out of debt without going through bankruptcy. It’s begun with a simple petition and an affidavit of debts and generally doesn’t require the debtor to appear in court.

It’s important to realize that Chapter 128 is very unlike bankruptcy in that it doesn’t offer any discharge of debts — that power resides only within the federal bankruptcy program. What it usually does, however, is stop interest from accruing on credit card and other unsecured debts and halts collection efforts (including distressing phone calls). It can also halt garnishments. This gives the debtor a chance to make good on all of his or her debts through an established repayment plan, without being buried under layers of interest, late-fees and missed payment penalties. This makes it a particularly good option for people who have gotten trapped in an endless cycle of payday loans that they can no longer handle repaying.

Just like in a bankruptcy, a trustee is appointed to handle the repayment plan for the debtor. The trustee’s fees (which have to be paid by the debtor) are usually rolled into the debtor’s monthly repayment plan. The trustee takes on the responsibility of notifying the debtor’s creditors about the Chapter 128 filing and handles any objections that arise. The debtor makes one monthly payment to the trustee, and the trustee distributes the funds according the repayment plan that’s been established.

Is Chapter 128 right for you? If you have a steady source of income and believe that you could repay your debts if you were given a fair opportunity and a chance to dig yourself out of never-ending additional interest and other penalties, it is worth considering. However, only an attorney can give you correct advice for your particular situation, once he or she has reviewed your case.

Source: docs.legis.wisconsin.gov, “Chapter 128,” Dec. 19, 2016