Wisconsin Chapter 128

[radi8]

For those fighting with debt or considering a "debt management plan" in Wisconsin, state law provides an alternative similar to a chapter 13 plan- only much simpler.

 

http://www.wisbar.org/AM/Template.cfm?Sect...CONTENTID=73094

 

 

Wisconsin Chapter 128 highlights:

 

Your debt is repaid in full over 3 years (or less) at zero percent interest.

Creditors are barred from wage garnishment or seizure of assets while you are in the plan and must cease garnishment if they have already sued and won. Utility service must be restored, evictions must be stopped. You receive protection very similar to the bankruptcy stay.

Almost any unsecured debt can be included, including payday loans, medical bills, credit card debt and state taxes.

Secured debt is a case-by-case basis.

No court appearance is necessary.

You may pick and choose which debts to include.

No schedules of property or assets, no bank statements, no "means testing", no "exemptions" as no assets can be seized.

Creditors may not report included accounts as "IIB" as this is not a bankruptcy plan.

There is no waiting period, you may file under WI chapter 128 immediately following chapter 7, chapter 13 or a previous WI chapter 128 plan.

The filing fee is $22

 

How much will you be paying?

Divide the debt you wish to include by 36- that's your monthly plan payment over 3 years. Add 7% to have the payments made through wage assignment to the court or 10% for a self-pay plan.

It's as simple as that.

 

You must be a Wisconsin resident in order to use Wisconsin's chapter 128.

[hurricanesfans27]

thats a great deal in lieu of ch 13

[EarnIt]

A nice option for those on the edge that have been rate jacked.

[clambert1273]

wow... wish more states offered these types of things..

[hurricanesfans27]

wow... wish more states offered these types of things..

 

bankruptcy court would go broke if that happened

[Meddie10]

I've done that. It was a great option for me at the time. Nothing listed as a public record. The amount of your payments is directly deducted from your paycheck so you never see it and it's automatically paid. There is an independent "trustee" who collects the money and pays the bills in proportion to the debt. My particular trustee paid them every three months. YMMV.

 

When going thru things, my lawyer sent out a letter to all OC's. Even if the debt had made it to a CA. He contacted the CA's and told them that the debts would be paid to the OC's and to return the debt to them.

 

Now for the bad part: no change to how things are listing. All of my debts were charged off, and they only changed to "paid" charge offs.

 

Now for the good part: I've gotten everything off my reports except for BOA on two and those will come off in September on their own. All thanks to CB.

 

When going thru a lender for any future credit, NOBODY seems to have ever heard of this. I've had to educate many people. It is possible to pay things off early too without penalty.

 

I've got some links back at the office. I'll post them here on Tuesday when I'm back to work. If anyone doesn't see them by noon, bump this to the top. I've got 6 week old twins and 3 other kids (one still in diapers). My sleep deprived memory ain't what it used to be!!

[sfbehr]

I agree, it would be great if more states (or the Feds) had such a law in place.

 

Think this should be "pinned" in the BK forum. What say you, mods?

[more credit less cash]

wow... wish more states offered these types of things..

 

bankruptcy court would go broke if that happened

 

Bankruptcy court. It would go bankrupt without any help.

[toopooor]

How much will you be paying?

Divide the debt you wish to include by 36- that's your monthly plan payment over 3 years. Add 7% to have the payments made through wage assignment to the court or 10% for a self-pay plan.

 

So you pay in full over 3 yrs?

[Meddie10]

How much will you be paying?

Divide the debt you wish to include by 36- that's your monthly plan payment over 3 years. Add 7% to have the payments made through wage assignment to the court or 10% for a self-pay plan.

 

So you pay in full over 3 yrs?

 

Yup.

[seattle]

Nice post Ive heard of it before I moved to Seattle, after getting out the military. Great Post though.

[toopooor]

How much will you be paying?

Divide the debt you wish to include by 36- that's your monthly plan payment over 3 years. Add 7% to have the payments made through wage assignment to the court or 10% for a self-pay plan.

 

So you pay in full over 3 yrs?

 

Yup.

 

so the only benefit of this is that if a creditor won't negotiate a 3 yr 0 int fixed rate payoff, the state will force them into it if you are willing to pay a 7 - 10% premium? I think i'd work on a settlement with the lender, especially if they are going to report it late or CO'd anyway. Settle it quick, wait at least 3 yrs after last update and dispute the TL.

[JunkBuyersWorstNightmare]

Viva Wisconsin!

[Curious]

How much will you be paying?

Divide the debt you wish to include by 36- that's your monthly plan payment over 3 years. Add 7% to have the payments made through wage assignment to the court or 10% for a self-pay plan.

 

So you pay in full over 3 yrs?

 

Yup.

 

so the only benefit of this is that if a creditor won't negotiate a 3 yr 0 int fixed rate payoff, the state will force them into it if you are willing to pay a 7 - 10% premium? I think i'd work on a settlement with the lender, especially if they are going to report it late or CO'd anyway. Settle it quick, wait at least 3 yrs after last update and dispute the TL.

If you file BK13, creditors get 0% interest on the debt. If you file BK7, they get 0 payments on the debt. With this alternative, they get paid in full in 3 years. Why would they report it as late or Co'd if they're getting paid each month and in full at the end of 3 years. You also don't have to deal with a public record on your report for 7-10 years.

 

I agree with others and wish more states would adopt this practice.

[Meddie10]

so the only benefit of this is that if a creditor won't negotiate a 3 yr 0 int fixed rate payoff, the state will force them into it if you are willing to pay a 7 - 10% premium? I think i'd work on a settlement with the lender, especially if they are going to report it late or CO'd anyway. Settle it quick, wait at least 3 yrs after last update and dispute the TL.

 

The "premiums" you noted are max premiums for two different options. I only paid 3%. Good luck finding a creditor who is willing to take a 3yr at 3% or less. And if you do? Great! You don't have to include them in the filing. To restate what Radi8 said, you can pick and choose which creditors you want included.

 

Anywho, here's a couple of links to the program:

 

Wisconsin Statute Section 128

Lawyer article on Section 128

 

There are a few more, but my work has started blocking random sites as "uncatagorized" so I couldn't check to see if they're still active today. If you're interested in more, just Google it.

[toopooor]

If you file BK13, creditors get 0% interest on the debt. If you file BK7, they get 0 payments on the debt. With this alternative, they get paid in full in 3 years. Why would they report it as late or Co'd if they're getting paid each month and in full at the end of 3 years. You also don't have to deal with a public record on your report for 7-10 years.

 

Maybe because you aren't paying interest and its not an installment loan (so you are underpaying the first yrs)?

 

meddie says:

Now for the bad part: no change to how things are listing. All of my debts were charged off, and they only changed to "paid" charge offs.

 

Maybe they charged off before s/he went into the plan and they will remain positive for others - but i doubt it. They'll almost certainly close the cards and a closed card with a balance is bad (on the other hand, you wouldn't do this unless you were in credit trouble anyway, so it doesn't matter.)

 

While it might be an alternative to Ch13 for some - its probably not a replacement for many 7's as many don't have the funds to PIF over 3 yrs. (40K is nearly 1200K a month in payments).

 

In the current environment you may be able to do better on settlements, assuming you have the money to pay. A settlement makes sense if you are going to get bad marks either way.

[Meddie10]

Lates and Charge Off's happened because payments were not made per the signed agreement (in my case, all were CC's). Trust me, I traveled that road for a long time. Found it easier to find violations in their listing of the tradelines and just had the whole thing removed.

 

No public record for 7-10 years is huge. This is NOT a bankruptcy and is not reported.

 

This option is certainly a YMMV. If you have a huge debt load, you may not be able to take care of things over the course of 3 years. If your debt load is lower, this may be a viable option.

 

As always, knowledge is power. Read up on ALL of your options and then determine the best course of action for your individual case.

[Curious]

If you file BK13, creditors get 0% interest on the debt. If you file BK7, they get 0 payments on the debt. With this alternative, they get paid in full in 3 years. Why would they report it as late or Co'd if they're getting paid each month and in full at the end of 3 years. You also don't have to deal with a public record on your report for 7-10 years.

 

Maybe because you aren't paying interest and its not an installment loan (so you are underpaying the first yrs)?

 

meddie says:

Now for the bad part: no change to how things are listing. All of my debts were charged off, and they only changed to "paid" charge offs.

 

Maybe they charged off before s/he went into the plan and they will remain positive for others - but i doubt it. They'll almost certainly close the cards and a closed card with a balance is bad (on the other hand, you wouldn't do this unless you were in credit trouble anyway, so it doesn't matter.)

 

While it might be an alternative to Ch13 for some - its probably not a replacement for many 7's as many don't have the funds to PIF over 3 yrs. (40K is nearly 1200K a month in payments).

 

In the current environment you may be able to do better on settlements, assuming you have the money to pay. A settlement makes sense if you are going to get bad marks either way.

Settlements are also a negative on your credit report. I think PIF over 3 years is a better alternative. I also like the idea that you get to pick and choose which creditors you include in this plan, unlike a BK where you have no choice.

[toopooor]

Settlements are also a negative on your credit report. I think PIF over 3 years is a better alternative. I also like the idea that you get to pick and choose which creditors you include in this plan, unlike a BK where you have no choice.

Yeah, but if you settle and get it over with, you can dispute them off within 3 - 4 yrs. If you end up with CO or rolling lates, you need to wait 2 - 3 yrs after the last update.

 

If the accts in the program CO, you are likely to lose most of your other accts to closure, cld, or RJ... same as if you settle some.

 

I see it as a good program for someone with low debts they can afford who were RJ, but not for someone close to the edge - it's not an end-all, be-all for debtors that will save many people (if it was, more banks would offer longer term hardship programs). For those on the edge, settlement over BK is better because it clears the debts as fast but without the PR.

[Meddie10]

Yeah, but if you settle and get it over with, you can dispute them off within 3 - 4 yrs. If you end up with CO or rolling lates, you need to wait 2 - 3 yrs after the last update.

 

If the accts in the program CO, you are likely to lose most of your other accts to closure, cld, or RJ... same as if you settle some.

 

I see it as a good program for someone with low debts they can afford who were RJ, but not for someone close to the edge - it's not an end-all, be-all for debtors that will save many people (if it was, more banks would offer longer term hardship programs). For those on the edge, settlement over BK is better because it clears the debts as fast but without the PR.

 

Within one year of finishing, I had successfully disputed all but one CO, which is currently on TU and EX only. All accounts I included were CO'd by the end of the 3 years.

 

Again, this is just another tool that will not fit every situation, but it's something that should at least be looked at prior to filing a BK to see if it would suit your needs. It's an "option" to look at. I don't think anyone here is saying that it's an end-all, be-all for debtors. I think a lot of posters here are just happy that there's another option on the table, at least in WI.

[Curious]

Settlements are also a negative on your credit report. I think PIF over 3 years is a better alternative. I also like the idea that you get to pick and choose which creditors you include in this plan, unlike a BK where you have no choice.

Yeah, but if you settle and get it over with, you can dispute them off within 3 - 4 yrs. If you end up with CO or rolling lates, you need to wait 2 - 3 yrs after the last update.

 

If the accts in the program CO, you are likely to lose most of your other accts to closure, cld, or RJ... same as if you settle some.

 

I see it as a good program for someone with low debts they can afford who were RJ, but not for someone close to the edge - it's not an end-all, be-all for debtors that will save many people (if it was, more banks would offer longer term hardship programs). For those on the edge, settlement over BK is better because it clears the debts as fast but without the PR.

You may or may not be able to dispute it off, there is no guarantee. There is also no rule that you have to wait 2-3 years after last update to dispute lates. I see it as a good program for anyone with financial difficulties. If there are some creditors who you would like to pay off so that when your finances improve, you may be able to get another card with, this is a great program.

 

USAA is offering something similar to this. From their website:

Having trouble paying USAA credit cards or loans?

 

We Can Help in Tough Times

 

If you're struggling with USAA credit card or loan payments, USAA Federal Savings Bank1 can answer your questions — large or small — and help you get a handle on your financial situation.

Call Us Today

Be prepared to discuss or provide the following items:

 

Your budget worksheet

Your income

Your bank accounts

 

Credit Card Debt

Are you having trouble keeping up with your USAA credit card payments? In addition to tips on taking control of your credit card debt, we can help you with:

 

Flexible payment options.

Reducing your monthly payment with a payment plan that lets you pay in installments over 12-60 months.

 

 

Call our credit card experts at 1-800-292-8811 for your personalized solution.

 

 

 

Home Equity, Auto and Personal Loans

If you're worried that you may have to sell your home or auto at a loss, call us first to discuss your options. We may be able to help.

 

We can also discuss:

 

Flexible payment options.

Deferred payments for 1-3 months.

Modifying the terms of your loan or line of credit.

 

 

Call our home equity and loan experts at 1-800-531-7013 for your personalized solution.

[Uncle Leo]

Interesting. I can see some downsides, based on what others here have said, but I can see some definite upsides too. This is something that I would have seriously considered instead of my Ch 7 last year... if I lived in Wisconsin, of course.

Edited April 7, 2009 by Uncle Leo

[Curious]

Interesting. I can see some downsides, based on what others here have said, but I can see some definite upsides too. This is something that I would have seriously considered instead of my Ch 7 last year... if I lived in Wisconsin, of course.

If I had this alternative, I would done it rather than my BK7 which is with me for 10 years. It would have given me the chance to salvage some of my postive accounts. Even if I had some CO's they would have been gone in 7 years even without disputes. In Aug, I will be at 7 years with my BK7 and I have 3 more years for it to remain on my report, assuming I can't dispute it off sooner which so far hasn't worked.

[radi8]

I made a couple of calls to area atty's because I was curious about how these plans end up, credit-wise. It's surprising the number of WI atty's who are not familiar with the law- and it appears that most all creditors have never heard of it.

 

In practice- it appears that folks completing the 3-year repayment most commonly end up with R7 or I7 notations, indicating the account was paid through a negotiated repayment plan- the exact same end result as a lot of "cccs" plans.

 

Where this law is most commonly used is for folks who are having payday loan troubles, or those who would otherwise consider a CCCS-type debt management plan.

What sometimes happens is- only the creditors threatening to file suit are included initially. As more creditors threaten, they are added to the plan, which is then re-started over a new 3-year period.

[toopooor]

I made a couple of calls to area atty's because I was curious about how these plans end up, credit-wise. It's surprising the number of WI atty's who are not familiar with the law- and it appears that most all creditors have never heard of it.

 

In practice- it appears that folks completing the 3-year repayment most commonly end up with R7 or I7 notations, indicating the account was paid through a negotiated repayment plan- the exact same end result as a lot of "cccs" plans.

 

Where this law is most commonly used is for folks who are having payday loan troubles, or those who would otherwise consider a CCCS-type debt management plan.

What sometimes happens is- only the creditors threatening to file suit are included initially. As more creditors threaten, they are added to the plan, which is then re-started over a new 3-year period.

This is definitely better than CCCS - especially because it protects from suits.

 

On redoing the plan - when you add new creditors, does that restart the 3 yr plan (and recalculate the payments) for the original ones in the plan?