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Home » Bankruptcy » Is Chapter 128 an option for your unsecured debt?

Is Chapter 128 an option for your unsecured debt?

| Jul 6, 2020 | Bankruptcy

Wisconsin residents who are struggling with unsecured debt can seek relief through Chapter 128 bankruptcy. With this state-specific process, you can make a court-approved plan to repay your debt over time.

Explore the provisions of Chapter 128 and learn how it differs from a traditional bankruptcy.

Types of eligible debt

Unsecured debts you can reorganize under a Chapter 128 filing include:

  • Utility, cable and phone payments
  • Past-due rent payments
  • Medical debts
  • Payday and other short-term loans
  • Personal loans
  • Speeding tickets
  • Credit card debt

You cannot reorganize secured debt, such as a mortgage or auto loan, with this type of filing.

The filing process

You start by filing a court petition that lists all your eligible debts and signing an affidavit agreeing to repay these debts over three years. With the help of a bankruptcy trustee, you will quantify the principal amount of your unsecured debt and divide by 36 to arrive at the monthly amount you will pay toward your debt. For example, if you have $20,000 in unsecured debt (not including interest), your monthly Chapter 128 payment would be about $555.56 a month. The trustee will submit this information to the court in the Wisconsin county where you live.

Benefits of Chapter 128

During your 36-month repayment period, your debts will not accrue interest. This makes Chapter 128 a smart option for many individuals who have high-interest debts they cannot repay. Creditors cannot garnish your wages or otherwise attempt to collect the debt after you file for Chapter 128. Unlike with a regular bankruptcy filing (Chapter 7 or Chapter 13), you do not need to submit complete information about your assets and income. This streamlines the process and provides more timely debt relief compared with other types of bankruptcy.

Most counties have a filing fee of about $32 for Chapter 128 bankruptcy. You can qualify for this affordable alternative as long as you can make the proposed repayment amount each month. Failure to do so may result in renewed collections activity.

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