Chapter 128 Bankruptcy
A Chapter 128 bankruptcy is a very simplified version of a chapter 13 bankruptcy. A Debtor can include any unsecured debt (credit cards, payday loans, speeding tickets, medical bills, late utility bills and rent payments) that they want to. Debtors may not include secured debts such as mortgages and car loans.
The Debtor will make a repayment plan that will pay their debt in full over a 36 month period.
Unlike a Chapter 13, the Debtor will not have to disclose their tax records, assets, other debts or their income. They also do not have to go through court mandated credit counseling and typically there are no court dates. A debtor may file Chapter 128 repeatedly, unlike limitations in bankruptcy law on the amount of time that must pass before a person may file again. A Chapter 128 should not affect a credit report like a bankruptcy does, although some have reported that a Chapter 128 appeared on their credit histories due to the unique nature of the law.
The Chapter 128 is a great alternative to traditional bankruptcy but it does not offer the same benefits that traditional bankruptcy does. Chapter 128 plans cannot reduce or eliminate debt in the same way that a debt discharge under bankruptcy can. And a Debtor can still be sued while in the bankruptcy.