Wisconsin Offers Debtors a Unique Form of Debt Relief: Section 128

People facing mounting debt have a few options for managing their debt, including debt consolidation and filing for Chapter 7 or Chapter 13 bankruptcy. Under Wisconsin law, debtors that reside in Wisconsin have an additional option: Section 128 debt amortization.

Section 128 is not bankruptcy; but it is similar to Chapter 13 bankruptcy in many ways. Section 128 allows debtors to consolidate their debts and pay them off over a three-year repayment period. Through Section 128, debtors are able to consolidate debts like medical bills, credit card bills, and missed rent and utility payments. Secured debts such as mortgage payments also may be consolidated into Section 128 repayments.

Also like Chapter 13 bankruptcy, Section 128 places an automatic stay that stops collection efforts, harassing phone calls and wage garnishments. In addition, Section 128 prevents utilities from shutting off power or heat during the repayment period.

Section 128, however, functions differently from Chapter 13 bankruptcy in important ways. Under Section 128:

• Debts will not be reduced or discharged at the end of the repayment period
• Debtors can decide which debts are included in the repayment plan
• There is only a three-year repayment period
• Debtors may avoid damaging their credit scores

For Wisconsinites struggling with smaller amounts of debt, Section 128 debt amortization may provide a way to get their finances under control. Deciding how to best manage debt is a determination that should be based on the unique circumstances of each person’s situation, though. Speaking with an experienced Wisconsin bankruptcy attorney will help you decide if filing for bankruptcy, Section 128 or another form of debt relief is right for you.