Voluntary Amortization of Debts

Voluntary amortization of debts has been an option in Wisconsin since 1937.
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Voluntary amortization of indebtedness has implications for Wisconsin residents and creditors in every state. Provisions in Chapter 128 of the Wisconsin Statutes provide an alternative to filing a Chapter 7 or 13 bankruptcy petition for Wisconsin residents. Creditors holding unsecured debt stand a better chance of collecting a past-due bill in full, because voluntary amortization does not discharge debt without payment.


How Voluntary Amortization Works

With voluntary amortization of debts, you work with a court-appointed trustee to set up an approved payment plan and amortize all debts included in the plan so they're paid in full within three years. Although creditors still have the option to file a judgment of payment, once you have an approved amortization order, they must stop charging interest on any outstanding balance and can't garnish your wages or bank accounts or otherwise attempt to collect on the debt. If you renege on the plan or do not pay the debt in full, creditors can resume debt-collection efforts.


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Eligibility and Qualifying Debts

Any adult Wisconsin resident with steady income is qualified to file for voluntary amortization of debts. Although steady income mostly means wages or salaries from regular employment, the State Bar of Wisconsin says that people receiving monthly unemployment insurance payments, Social Security disability benefits or alimony also qualify. You can include most types of past-due unsecured debt, including rent payments, utility bills, credit cards, medical bills and payday loans. However, you can't include secured debt unless the creditor agrees. In addition, you must be capable of paying all debts included in the amortization plan within three years.


Paperwork Requirements

Voluntary amortization of debts has fewer paperwork and filing requirements than bankruptcy. Unlike a bankruptcy petition, voluntary amortization doesn't require that you submit schedules of property or copies of past tax returns or attend mandatory counseling. Instead, you submit a notarized petition to amortize debts, an affidavit of debts and an order appointing trustee and enjoining creditors, and then you receive your approval by mail. There usually is no need to attend a court hearing or a meeting of creditors.