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The Debt Settlement Sales Person Said His Plan Was Better Than My Wisconsin Chapter 128 Option. – Steve

“Dear Steve,

Primary mortage, second mortgage to pay off previous CC debt, $65.000 of other non secured loans and CC debt. We are struggling check to check with some late payments. About $35000 equity in our house once second mortgage is paid off in Oct. Combined income of around $85000

We are struggling to make our monthly payments. In October I will have a second mortgage paid off that will free up $900 a month which would help out our situation. OUR unsecured debt is quite large at around $65000. My wife had a debt settler call us and he said he could knock our monthly payment down to $900 which would take care of the majority of the debt. My question. Is this the correct thing to do and what impacts will it have on our credit score ? I mentioned to the gentleman that in WI we have a chapter 128 that allows you to repay unsecured debt in 3 years without interest.

I asked him which would be better to do in terms of our credit score. He told me that debt settlement would probably be better because it wouldnt stay on our report as long as the chapter 128 (which is not bankruptcy). Which will have less negative long term affects to my credit score ?

This whole situation drives me nuts and drains me….. We make enough money just have to get out of the hole somehow.


Dear Steve,

The debt settlement sales person is just trying to sell you his widget. The negative credit from a debt settlement plan and the notice that your debts were included under a Wisconsin Chapter 128 approach would both be listed for seven years.

You are a lucky guy to live in Wisconsin and have access to a Chapter 128 plan. For those people that don’t know, Wisconsin has a State Court administered plan called a Chapter 128 under which a Wisconsin resident can get the same protections as bankruptcy but not go bankrupt. Under the plan the consumer has three years to repay their debt at 0% interest and if all the debt is not repaid by the end of the term a new Chapter 128 can be filed.

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Under the Wisconsin Chapter 128:

  • You do not need to enter all of your debt.
  • You do not need to go to court.
  • It stops garnishments.
  • It’s inexpensive. About $22 plus attorney fees.

When you go into a debt settlement program the company will tell you they can’t get the best settlement deals unless you are 90+ days delinquent on your accounts. This will land you in collection, you could be sued and your wages could be garnished. There are some serious consequences to settling.

For me it is a clear answer, if you can afford to repay your unsecured debt over three years interest free, go that route. The debt settlement company will probably charge you $9,750 and the 128 plan will probably be around $950, including the filing fee. Heck, even if you went the bankruptcy route the cost would only be $1,500. Debt settlement seems to make no logical sense for you at all. Tell the sales person to take a hike.

If you’d like more information about a Wisconsin Chapter 128 plan click here.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.


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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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