Sacramento Bankruptcy Attorney serving Elk Grove describes Wisconsin’s Chapter 128 alternative to filing Chapter 7 or Chapter 13 bankruptcy to deal with unmanageable debts.

For the past few years, Wisconsin has been the only state with form of debt relief under a state law Chapter 128 petition which functions as an alternative to bankruptcy.  According to an April 19^th Journal Sentinel article entitled “Petitions in Bankruptcy Alternative Rising Sharply,” over 640 people have already filed this year for what is known as a voluntary amortization of debt.

Here’s some basics provisions under Chapter 128:

• Petitioners can choose what debts to consolidate and what debt to leave out of the process,
• Creditors often forgive interest and penalties, thereby seeking restitution of mainly the principal, and
• Utility companies are forbidden from cutting off utility services during the payback period.
• After adding up all included debts, and adding court costs, the judge in your case will divide that amount into 36 equal monthly payments.

This process sounds like a simplified form of a Chapter 13 bankruptcy.  However, there are a few differences:  (1) the debtor is required to find his own trustee to distribute the 36 monthly payments among creditors, (2) the process typically involves selected debts, not all your debt, and (3) this voluntary debt amortization process is often filed without the assistance of an attorney.

The Wisconsin law for voluntary debt amortization is already facing challenges; including a recent request by a Wisconsin energy company, to have the requirement that utility companies must leave utilities on during the repayment period, be removed from the law.

Chapter 13 bankruptcy already addresses many of these issues, perhaps no alternative is needed at all:

• Chapter 13 generally addresses all debts, although you can re-affirm certain debts if you arrange to do so
• Chapter 13 bankruptcy assigns your case a trustee, you don’t have to hire one on your own. Although it is legal to file Chapter 13 cases pro se (represent oneself), it is generally advisable to seek the counsel of an experienced bankruptcy attorney to protect your rights.
• It is possible, through Chapter 13 repayment plan, to discharge far more than just interest and penalty fees from your outstanding debts.

The advice of an experienced bankruptcy can help you decide among many options, depending on income, assets, the nature of your debts, and the goals you may have for after Chapter 7 or Chapter 13 bankruptcy.

Please contact our Sacramento office serving Elk Grove at 916-313-9069 or via email at info@california-bankruptcyattorney.com