Source: https://www.kohnlaw.com/Legal-Notes-Blog/May-2015-(1).aspx
Timestamp: 2019-04-23 23:59:21+00:00

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A debt amortization, commonly referred to in Wisconsin as a “Chapter 128" given that it falls under that chapter of the Wisconsin statutes, is essentially the Wisconsin state equivalent to a Chapter 13 bankruptcy in that it provides for a debtor to enter in to a debt repayment plan. It is not a bankruptcy, though it has many similarities. Chapter 128 was created in 1937 and was modeled after some of the federal bankruptcy provisions.1 The intent of the Chapter was to aid individuals in paying their debts to avoid bankruptcy and to protect them from high interest rates.2 Instead of declaring all debts, income, and assets, a debtor can consolidate just the debts he/she wants to manage. No tax returns need to be filed and no credit counseling course has to be taken. There is also no means test. A debtor can file for this type of protection right away after the last case is dismissed unlike the two, four, six, and eight year rules that apply in federal bankruptcies. Unlike a Chapter 7 bankruptcy, filing a Chapter 128 debt amortization does not discharge the debt without repayment. All included debts must be paid in full via a three-year repayment plan before the trustee will move to dismiss the case and file a report of completion.
For purposes of this article, let’s assume that after completion of a supplemental examination the debt collector determines that a debtor is self-employed. Let’s further assume that the self-employed debtor is not a W-2 employee, but is instead an independent contractor. Simply put, 1099's and W-2's are two separate tax forms for two different types of workers. If someone is a W-2 employee, payroll taxes are automatically deducted from their paycheck and then paid to the government through his/her employer. Types of earnings that are included on a W-2 are wages, salary and tips. This statement is completed by the employer and is required by law.9 If someone is a 1099 employee, on the other hand, they get a 1099 form. They are responsible for calculating their own payroll taxes and then submitting the sum to the government on a quarterly basis.
In conclusion, a debtor, who is self-employed should not have his wage amortization granted because his principle source of income is received from self-employment/independent contractor work not from wages or salary. His income is also not consistent so he won’t be able to make regular payments under said plan.
1 See Chapter 128: Wisconsin’s Bankruptcy Alternative, Murrell. Wis. Law. May 2008.
2 See Personal Receivership: An Alternative to Bankruptcy, Johnson. Wis. Law. Sept. 1990.
3 See Wisconsin Statutes Chapter 128.
4 Wis. Stat. § 128.21(1).
5 Wis. Stat. § 128.21(2).
6 Wis. Stat. § 128.21(7).
7 Wis. Stat. § 128.21(3)(a)(b).
8 Wis. Stat. § 128.21(3r).
9 26 U.S. Code § 6051(a).
10 Wis. Stat. § 128.21(3)(b).

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