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Wisconsin 128 Debt Relief Option

One alternative to bankruptcy, available only to Wisconsin residents, is a “Wisconsin 128.” I advise this option for clients who are only facing issues with unsecured debt, and who can afford to pay back some or all of their unsecured creditors, over a three year period. Once you identify all the unsecured creditors that you wish to include, a plan is proposed and filed in state court, who then appoints a trustee who acts as a receiver for the plan payments and makes distributions according to the plan. You enjoy the protections of the Wisconsin 128 plan if you remain current on your payments to the trustee (which can be deducted automatically from your paycheck and save you on trustee fees.)

What benefits do I receive if I put my bills in a Wisconsin 128 plan?

Upon filing your plan, all collection efforts of the creditors included in the plan must cease, including garnishments. The creditor then files a claim, and future interest and penalties are not included in the claim. Interest accrued prior to filing the Wisconsin 128 is usually included in the creditor’s claim, which must be paid through the plan. You receive many of the same benefits that you would under a bankruptcy stay (I won’t address distinctions here, which could be important to your case and why you should speak to an attorney who is familiar with both bankruptcy and the laws of the Wisconsin 128, before deciding.)  However, the creditor may still pursue a judgment (but can’t collect on it) and if you fail your plan, the interest and penalty can accrue as though you never filed.   Always be sure you can afford a Wisconsin 128 before going into it.

What debts can be included in a Wisconsin 128 plan?

Unsecured debt that can be placed in a Wisconsin 128 includes medical bills, dental bills, late rent, credit card bills, pay day loans, personal loans, civil judgments, tickets and fines, past due utility bills, and in limited cases, state and municipal taxes.

What debts cannot be included in a Wisconsin 128 plan?

Secured debts cannot be solved through a Wisconsin 128, such as past due mortgage payments, and past due car payments. Domestic support obligations such as child support arrears should not be included. A Wisconsin 128 cannot resolve property taxes, and the IRS will not recognize a Wisconsin 128 for any tax liability.

Must I include all my unsecured creditors in a Wisconsin 128 plan?

No. There are some circumstances where it won’t make sense to include all of your unsecured debt, and you can always include creditors that you initially left out of the plan by amendment.

How do I know if I should consider a Wisconsin 128 plan?

A Wisconsin 128 is an excellent solution for the right circumstance. You should speak to an attorney who is familiar with both bankruptcy and Wisconsin 128 procedure before you decide. A good starting point is to estimate your plan payment after you total the unsecured debt balances you wish to include, add 10%* to represent costs and administration, and then divide it by 36. For example, if you are getting garnished on a debt that is $3,000.00 and wish to only include that debt in your Wisconsin 128 plan, you would estimate a total debt obligation of $3,300.00 ($3,000 + $300) and divide it by 36 to estimate a payment of: $91.67 per month.

*The trustee will usually only charge 7% if withheld through your paycheck.

Can I file a Wisconsin 128 without an attorney?

A Wisconsin 128 can be filed through my office for a fraction of the price of a bankruptcy. I’ll give you a firm price once I’ve met with you and reviewed your circumstances.

Can I file a Wisconsin 128 without an attorney?

Certainly. I could pull my own teeth, too, I suppose. However, it is advised you have an attorney advocate at all stages of the Wisconsin 128 filing. Call my office at 307-460-8598 and schedule a low-cost consultation to see if a Wisconsin 128 is right for you.

What is Garnishment?

What is a Garnishment?

Once a judgment is entered against you, the judgment creditor can apply to garnish either your wages or your bank accounts if the balances are high enough, which depends on the state exemption (or protection) limit.

Garnishments can make a significant impact on your ability to support yourself and your family. The garnishment procedure is easy to start and often difficult to challenge. The amount garnished will include payment for the judgment creditor’s attorneys’ fees and the cost of filing the garnishment.

The law may allow you to avoid the garnishment if you can show your income is below the poverty guidelines, which are included with the garnishment forms. In most states, you can also avoid garnishment if you can prove that you receive need-based public assistance, or if you are eligible for such assistance.

Child support payments take precedence over garnishments.

Our office can easily spot defenses during a consultation and review of the garnishment paperwork, and a recent pay stub. You may still have time to challenge your garnishment. However, there is a strong possibility that your employer and the judgment creditor followed all the rules and you’re stuck with the garnishment.

How Can I Stop Wage Garnishment?

There are four ways to avoid an earnings garnishment:

Change jobs?

Job-hopping is an unwise strategy in a recession, and can cost you far more than what you hope to save by ducking the wage garnishment. Furthermore, some aggressive judgment collectors will find out where your new job is, or focus on your bank accounts instead. All the while, post-interest judgment continues to accrue.

Pay it off?

Your financial circumstances might be favorable enough to pay the underlying judgment of your garnishment, but our office would need to know more about your situation before advising that you borrow money from another source of money to pay the judgment in full.

File a “Wisconsin 128”?

There is a procedure under the Wisconsin Statutes, sometimes referred to as a “Wisconsin 128” or “Chapter 128.” Filing for relief under the state statute also stops the garnishment. This procedure is less expensive, easier to apply for, and allows you to choose which debt you wish to be restructured. However, you must pay off all the debt that you allocate to the plan within three years. The plan can be changed and restarted, as circumstances arise, but the law insists that the debtor doesn’t abuse the system.

File Bankruptcy?

Should you file bankruptcy?  Bankruptcy stops garnishment proceedings upon filing your case, and with limitation, can return money seized through garnishment back to you.  Bankruptcy can also provide effective relief for any other debts you may have. Explore this website to learn more about bankruptcy and dispel some of the myths. For example, you typically won’t lose your house, or your car, or your household belongings. Your overall credit profile can improve in some cases, especially if you avoid incurring debt after you file. You can get rid of most types of debt, including the judgment used to garnish your wages. Contact our office for a low-cost bankruptcy consultation, and get rid of your garnishment for good.