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Debt Collection Laws in Wisconsin

Dena Standley | November 07, 2023

Dena Standley
Legal Expert, Paralegal
Dena Standley, BA

Dena Standley is a seasoned paralegal with more than 20 years of experience in legal research and writing, having received a certification as a Legal Assistant/Paralegal from Southern Technical College.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: Creditors have numerous options for collecting debt in Wisconsin, but they must obey the law when doing so. Wis. Stat. § 427 is Wisconsin's most notable debt collection law that regulates the actions of collectors there, but there are several other collection laws in Wisconsin that protect consumers, like you, from unfair treatment.

Debt collection begins when a consumer defaults on an "account, bill, or other indebtedness." It could be a car loan, credit card, medical bills, second mortgage repayments, and back taxes. The creditor finds a way to make the consumer pay the debt. Often, debt collection starts with calls and letters before creditors consider more serious methods such as lawsuits.

The federal government sets laws that provide guidelines for carrying out debt collection. An example is the Fair Debt Collection Practices Act (FDCPA). Such laws protect consumers from abusive collectors. Wisconsin has also established regulations to curb illegal debt-collection practices.

The Wisconsin State Legislature has enacted laws and regulations to keep Wisconsin debt collectors in check. This article explains these laws and how they apply at each stage of the collections process so you can know if a collector is acting illegally.

Let's jump right in.

Dealing with the early stages of debt collection in Wisconsin

Wis. Stat. § 427 ensures that debt collectors follow the law. As mentioned, debt collectors first contact you to remind you of the defaulted account.

The debt collector must verify the debt in writing within five days of contacting you. The verification must contain the statement that the debt will be presumed valid unless you challenge the account within 30 days.

You should request debt validation within 30 days to challenge the account details. It is always wise to validate every debt, even if you think it is yours.

A Debt Validation Letter informs the collector that you want proof of the debt, including the original contract, the repayment history, and the current debt amount. It also tells them that you are disputing the debt, and they have 30 days to validate it or stop collecting.

Respond to debt collection letters fast with SoloSuit.

The US Code Section § 1692c, which also applies in Wisconsin, requires that debt collectors respect the consumer's wishes regarding communication.

Under this section, a debt collector may not do the following:

  • Call you at inconvenient hours unless you permit them to do so. Even if the debt collector does not know whether calling you at a particular place or time is convenient, the law still prohibits early morning and late night calls. The Wisconsin Consumer Act restricts debt collection calls between 8:00 am and 9:00 pm.

  • Call you directly if they know you have an attorney representing you regarding the debt. The only exceptions are if the attorney does not respond within a reasonable time or they cannot contact them after reasonable attempts.

  • Call you at work if they know your employer does not allow it.

  • Continue debt collection calls after you advise them in writing to stop contacting you. They may only reach out to inform you of an action they plan to take, for example, a lawsuit.

The Wisconsin Consumer Act § 247.104 also prohibits harassment of consumers in any way, and it offers protection from debt collectors threatening to disclose information about the debt to anyone other than the debtor.

You are entitled to compensation under section § 425.304 if a debt collector violates these regulations.

Can a debt collector sue me in Wisconsin?

Yes. If a debt collector fails to make you pay off, settle, or set up a new repayment plan, they may take you to court.

If a debt collector takes you to court, you should receive the Summons and Complaint document. Rules of Civil Procedure § 802.06 (1)(a) states that you have 20 days to respond in Wisconsin.

Responding to a court Summons is more intensive than writing back to the plaintiff acknowledging that you received the papers. While the Summons informs you that you have a case to answer in court, the accompanying Complaints document explains why the creditor is suing you. The court requires you to respond to every claim in that document. The Answer should follow a preset format.

Note: In Wisconsin, it is illegal for a third-party debt collector to initiate a lawsuit without the original creditor's authorization. However, they can suggest it to the creditor, who makes the final decision.

Read More: How to Respond to Debt Collection Summons in Wisconsin.

Be sure to file your Answer in court within the deadline to prevent a default judgment. You can draft a customized Answer in minutes with the help of SoloSuit or use form SC-V5200 (PDF) to respond if the lawsuit is in the small claims court.

After filing your Answer, you can negotiate a settlement for less than you owe. Use SoloSettle to make the best offer.

Let’s look at an example of a real SoloSuit customer who used SoloSuit to respond to a debt lawsuit.

Example: Frank was sued by Capital One in the Door County Circuit Court in Wisconsin. He used SoloSuit to draft and file an Answer to the case within Wisconsin’s 20-day deadline. When the court scheduled a hearing for six weeks later, Capital One decided to file a Letter of dismissal and stipulation. This means that the parties came to an agreement outside of court and the case was dismissed. Frank avoided going to court and resolved his Wisconsin debt.

This is a real example. The name of the individual has been changed for privacy purposes.

What if I lose my debt collection lawsuit in Wisconsin?

You may lose the lawsuit if you do not respond in time or if the debt collector rejects your offer to settle and proves to the judge that the debt is yours.

If the court rules for the debt collector, they can legally use other remedies to recover the debt.

A debt over six years old may be past the statute of limitations in Wisconsin. A creditor can no longer sue. Learn more about the Wisconsin statute of limitations on debt in this video:

Permissible debt collection remedies in Wisconsin include the following:

  • Wage garnishment.
  • Bank account levies.
  • Real estate liens.
  • Property seizure.

The most common of these remedies is wage garnishment.

What is the wage garnishment process in Wisconsin?

In Wisconsin, a judgment creditor (a creditor who wins a debt collection lawsuit) can ask your employer to withhold some of your pay to recover what you owe. The garnishment happens every pay period until they have recovered the judgment amount.

But Wisconsin limits how much of your wages a creditor can take. Wis. Stat. § 812.34(2)(a) allows a judgment creditor to garnish up to 20% of your disposable income. You should keep at least 80% of your earnings every pay period. The law further prevents a judgment creditor from taking part of the 20% if the money you have left puts you below the poverty line.

Remember that the 80% exemption does not apply if the debt is for domestic support, back taxes, or was ordered by a court under § 128.21.

Avoid wage garnishment through debt settlement.

Note: Wage garnishment to recover payday loans is illegal in Wisconsin.

The court may also authorize the judgment creditor to take money from your bank account (bank levy), place a lien on your property, or seize your personal property to recover the money you owe.

As you can see, several laws are on your side when you have a debt in collections in Wisconsin. Understanding these laws places you ahead of the debt collector, allowing you to defend your rights.

SoloSuit has all the resources you need when facing debt collection in Wisconsin, whether it’s replying to a debt collector’s first notice, responding to a debt lawsuit, or settling your debt.

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