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.
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.
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.
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:
Bank account levies.
Real estate liens.
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.
Some creditors, banks, and lenders have an internal collections department. If they come after you for a debt, Solosuit can still help you respond and resolve the debt. Here’s a list of guides on how to resolve debt with different creditors.
Don’t have time to go to your local courthouse to check the status of your case? We’ve created a guide on how to check the status of your case in every state, complete with online search tools and court directories.
Forgot to respond to your debt lawsuit? The judge may have ordered a default judgment against you, and with a default judgment, debt collectors can garnish your wages. Here are our guides on how to stop wage garnishment in all 50 states.
Debt settlement is one of the most effective ways to resolve a debt and save money. We’ve created a guide on how to settle your debt in all 50 states. Find out how to settle in your state with a simple click and explore other debt settlement resources below.
Not sure how to negotiate a debt settlement with a debt collector? We are creating guides to help you know how to start the settlement conversation and increase your chances of coming to an agreement with every debt collector.
If the thought of going to court stresses you out, you’re not alone. Many Americans who are sued for credit card debt utilize a Motion to Compel Arbitration to push their case out of court and into arbitration.
Below are some resources on how to use an arbitration clause to your advantage and win a debt lawsuit.
Do you keep getting calls from an unknown number, only to realize that it’s a debt collector on the other line? If you’ve been called by any of the following numbers, chances are you have collectors coming after you, and we’ll tell you how to stop them.
And 50% of our customers' cases have been dismissed in the past.
"Finding yourself on the wrong side of the law unexpectedly is kinda scary. I started researching on YouTube and found SoloSuit's channel. The videos were so helpful, easy to understand and encouraging. When I reached out to SoloSuit they were on it. Very professional, impeccably prompt. Thanks for the service!" - Heather