A Chapter 128 case filing is a unique option for debtors in Wisconsin that allows them to avoid filing a federal bankruptcy case by paying off debt utilizing a repayment plan supervised by a court-appointed trustee. Debtors can include all unsecured debts when filing a Chapter 128 case. This could include: rent payments, utility, medical and dental bills. Additionally, debtors can include specific secured debts, such as house and car payments but not federal income tax balances. Wisconsin residents with a steady source of income can qualify for this classification.
Phin Solutions aggregates Wisconsin Chapter 128 case filings daily in real time. A client's account portfolio is matched to the Chapter 128 database using consumer name and address, resulting in the flagging of accounts that may fall into this filing status. This monitoring service is run weekly on an account portfolio, and an output file is returned to allow clients to capitalize on collections.
Applicants who file under the Chapter 128 statue are not required to disclose all debts like traditional bankruptcies, but they are required to pay the full balance plus the cost of the trustee unlike a Chapter 7 or 13. The debtor sends monthly payments directly to the trustee following their appointed payment plan. If the debtor fails to follow their payment plan, they are liable for the interest that accrued during their payment plan and creditors can recommence collection actions.
Once a person files a Chapter 128 case, listed creditors are prohibited from attempting to collect on debts, but they are permitted to litigate against the debtor in court. If a judgement is obtained against a debtor, the creditor will not be allowed to collect on the judgment or to negotiate a settlement with the debtor directly. Instead, the creditor must report the judgment to the court assigned trustee, who will adjust the debtor’s monthly payment plan accordingly.
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