Wisconsin Collection Laws

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Highlights

  • Wisconsin's statute of limitations for most consumer debts is 6 years.
  • Collections is illegal after the statute of limitations expires.
  • You may have liability for your spouse's debt in Wisconsin.

Your Rights as a Consumer in Wisconsin For Collections

If you owe debt and reside in Wisconsin, it’s important to understand your rights and liabilities. It is even more important if a creditor threatens to file a lawsuit against you.

A lender, collection agent or law firm that owns a collection account is a creditor. Wisconsin law gives creditors several means of collecting delinquent debt from you.

Before a creditor may use these legal tools in Wisconsin, the creditor must go to court to receive a judgment against you. See the Bills.com article to learn more about this process, and how to fight a lawsuit.

A court will hold a hearing after a creditor files a lawsuit. A hearing may result in a judgment awarded to the creditor. A judgment is a court’s declaration the creditor has the legal right to demand:

The laws calls these remedies. A creditor granted a judgment is called a judgment-creditor. Which tool a judgment-creditor may use depends on the circumstances and Wisconsin law. We discuss each of these remedies below. In Wisconsin, the following laws are found under Wisconsin Statute unless specified.

Wisconsin Wage Garnishment Rules

The most common method used by judgment-creditors to enforce judgments is wage garnishment. A judgment-creditor contacts your employer and requires the employer to deduct a certain portion of your wages each pay period and send the money to the creditor.

In most states, creditors may garnish between 10% and 25% of your wages, with the percentage allowed determined by state law. Garnishment of or for consumer debt is not allowed under federal law, but may be allowed for child support. See the Bills.com article to learn more.

In Wisconsin, wage garnishment is allowed under (PDF). Unless the court grants relief under applies, 80% of the debtor’s disposable earnings are exempt from garnishment under this subchapter. If the judgment-creditor is aware of the debtor’s place of employment, it may seek wage garnishment.

Under federal law, the garnishment applies to 20% of the debtor’s net take home pay also known as disposable income, (i.e. gross pay less statutorily mandated deductions). Under , service on the debtor shall be made within seven business days after the date of service on the garnishee and at least three business days before the payday of the first pay period affected by the garnishment. Service by mail is complete upon mailing.

Under Wisconsin law, if the garnishment of 20% of the debtor’s disposable income under subchapter would result in the debtor’s household income being below the poverty line, the amount of the garnishment is limited to the debtor’s household income in excess of the poverty line before the garnishment is in effect. Also, under no garnishment action shall be brought to recover the price or value of alcohol beverages sold at retail. (In other words, a Wisconsin resident cannot have their wages garnished for a delinquent bar tab.)

Wisconsin law permits earnings garnishment for child support and maintenance up to 25% of the debtor’s disposable income.

Wisconsin Bank Account Levy

A levy means that the creditor has the right to take whatever money is in a debtor’s account and apply the funds to the balance of the judgment. Again, the procedure for levying bank accounts, as well as what amount, if any, a debtor can claim as exempt from the levy, is governed by state law. Many states exempt certain amounts and certain types of funds from bank levies, so a debtor should review his or her state’s laws to find if a bank account can be levied. Some states call levy attachment or garnishment.

In Wisconsin, attachment is allowed under Uniform Commercial Code-Secured Transactions (PDF).

If you reside in another state, see the Bills.com resource to learn more about the general rules for this remedy.

Wisconsin Lien

A lien is an encumbrance — a claim — on a property. For example, if the debtor owns a home, a creditor with a judgment has the right to place a lien on the home, meaning that if the debtor sells or refinances the home, the debtor will be required to pay the judgment out of the proceeds of the sale or refinance. If the amount of the judgment is more than the amount of equity in your home, then the lien may prevent the debtor from selling or refinancing until the debtor can pay off the judgment.

Under Wisconsin (PDF), Creditor’s Actions, when a lien has been obtained by judgment against a debtor, the debtor may make an assignment of all non-exempt property for the benefit of all of creditors within 30 days of judgment. The lien shall then be dissolved and the property will be turned over to the assignee.

Under Wisconsin (PDF), Attachment, any creditor may attach a debtor’s property only through the issuance of a Writ of Attachment by a judge or judicial officer at the express request of the creditor at any time before final judgment and after a summons and a complaint are filed.

If you reside in another state, see the Bills.com article to learn more.

Wisconsin Statute of Limitations

Each state has its own statute of limitations on civil matters. Under Wisconsin (PDF), the statute of limitations on open accounts (i.e., credit cards), and written and oral contracts is 6 years. The statute of limitations on promissory notes is 10 years.

Wisconsin law prohibits any collection efforts on accounts where the statute of limitations clock has expired. This rule applies to original creditors and collection agents.

Under Wisconsin § 893.05, a creditor may not file a lawsuit on a debt after the Wisconsin statute of limitations expires. If a collection agent or original creditor attempts to collect expired debt create a cause of action under Wisconsin law as well as under the federal because any collections actions misrepresent the legal status of the debt. This consumer-friendly rule is an exception only Wisconsin and one other state share (Klewer v. Cavalry Invs., LLC, 2002 U.S. Dist. LEXIS 1778 *7 (W.D. Wis. 2002) and Gervais v. Riddle Associates, 479 F. Supp. 2d 270 (D. Conn. 2007)).

Collection agents violate the if they file a debt collection lawsuit against a consumer after the statute of limitation expired (Kimber v. Federal Financial Corp. 668 F.Supp. 1480 (1987) and Basile v. Blatt, Hasenmiller, Liebsker & Moore LLC, 632 F. Supp. 2d 842, 845 (2009)). Unscrupulous collection agents sue in hopes the consumer will not know this rule.

The statute of limitations on Wisconsin judgments is a bit more complicated. In Wisconsin, a judgment becomes a lien for 10 years on all real property the judgment-debtor owns or acquires in the county or counties where the judgment is docketed. A judgment-creditor has 20 years from the judgment date to have a county sheriff attempt to seize the debtor’s property. The 10- and 20-year lengths on Wisconsin judgments can be extended another 10 and 20 years if the judgment-creditor obtains permission from the court and refiles an action against the judgment-debtor.

Wisconsin Foreclosure

Wisconsin foreclosure laws can be found in (PDF), Real Estate Foreclosure. Under the original judgment of foreclosure, a deficiency judgment may also be rendered as a separate judgment (Chapter 846.04). The party is then liable on or after the confirmation of sale.

Community Property & Wisconsin Law

Wisconsin is one of 10 community property states. If you live in Wisconsin, you may have liability for your spouse’s debt. Wisconsin’s community property law is tricky, so do not assume you must pay your spouse’s debt automatically. Also, a separate law called the may obligate you to pay your spouse’s debt. Read the Bills.com article to learn more.

Wisconsin Vehicle Repossession

Read the Wisconsin Bar Association’s article to learn more about Wisconsin’s repossession laws.

Recommendation

Consult with an attorney licensed in Wisconsin who is experienced in civil litigation or consumer law to learn precise answers to your questions about liens, levies, and garnishment in Wisconsin.

If you cannot afford a lawyer, contact or another to find no- or low-cost legal services.

64 Comments

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  • MH
    Jun, 2014
    marsha
    My husband and I traded one of our vehicles a year ago with his friend for a different vehicle. To make a long story short, the car is still on our garage and we still have no title. The friend had disappeared for awhile and recently came in contact with us again (always when he needs something) and come to find out, he cannot get the title here in WI, even though is comes back registered to him, because of a lien that is on the title in CA? My husband's friend said that he had the car dealership (who he is friends with) place the lien on the car for him so he could get it back, because someone had stolen it back in 2012 and abandoned it there. So basically it is a fake lien. His friend reassured us that he would get the lien release from them. That hasn't happened.

    My husband went to the car dealership. Spoke to the owner who said, even though this car was originally paid in full and the lien was "fake"...he is not releasing it until "the friend" pays them what he owes them for the current car he got from them.

    Can a dealer even do this legally? How can they hold this "fake lien" on a car, for a different car-that is even in their possession? I have been looking up laws and it sounds like they would of had to file a judgement against the "friend" in order to do this. But honestly since they have known him a long time my guess is that is not the case. Anyone have advice? Just want to get the title so my husband can enjoy the car.
    0 Votes

    • BA
      Jun, 2014
      Bill
      Finding who is telling the truth here — the dealer or your friend — is a challenge.

      Consult with a lawyer who has consumer law experience. Your lawyer may need to send a sternly worded letter to the other two parties (the wayward friend and his possibly unscrupulous car dealer) with the threat of a lawsuit to have the dealer release the lien. Then, if the letter doesn't work, you may need to sue both parties to bring them to the negotiating table.

      For the benefit of other readers, Marsha's story is a cautionary tale to always take three steps before closing a deal to buy a used car:
      • Hire a mechanic to inspect the vehicle before you agree to buy it to uncover any maintenance surprises
      • See a clean title before paying the owner
      • Make sure the vehicle passes any state-required smog inspection before paying the owner

      A smart additional step is to run a Carfax check on the vehicle to make sure it isn't a flood car, has unexplained mileage rewinds, or uncompleted recall repairs.

      0 Votes

  • IR
    May, 2014
    Israel
    I received a letter asking me to pay for a checking account that went into overdraft a couple of years ago. The amount that was in overdraft was probably $400 and now they are asking for me to pay 4x as much. I would like to know if the statute of limitations applies to the date of charge off (in my case 09/2010) or the date of origination (08/2006)? PS: This claim doesn't even appear in my credit report and yet when I look at all I see is that the collection agency has accessed my credit report.
    0 Votes

    • BA
      May, 2014
      Bill
      When it comes to learning if you have a legal obligation to pay a debt, ignore what appears on your credit report. Credit reports are not legal ledgers that record who owes debt and how much. Think of credit reports as specialized newspapers, and we all know that what appears in a newspaper is not 100% accurate.

      In most states, the statute of limitations clock for breech of contract starts the moment you become delinquent, and not when the lender decides to write-off the account.

      You mentioned "date of origination" and "date of charge-off." Neither are starting points for a statute of limitations clock.
      0 Votes

  • JB
    May, 2014
    Jackie
    I have medical bills where I can only pay $25 a month. Can they send me to collections for not making a bigger payment?
    0 Votes

  • AD
    Apr, 2014
    Amber
    I have two judgements against me, both are in Wisconsin. They are dated 9/2007 and 3/2005. I no longer live in Wisconsin. Could these judgments prevent me from obtaining a mortgage in California? I'm not sure how to pay one of them off as it is to a private party and I don't know how to reach them.
    0 Votes

    • BA
      Apr, 2014
      Bill
      To find the judgment-debtor, go to the court where the judgment is filed and get a copy of the judgment.

      You did not mentioned the amount of the judgments. Larger judgments may cause more trouble for you. Each mortgage lender has different policies to handle old, seemingly dormant out-of-state judgments. The best and only way to learn if you qualify for a home loan is to pre-qualify. Contact several lenders to learn their underwriting policies on judgments.
      0 Votes

  • KN
    Apr, 2014
    Kay
    When i was married to my husband, he had back surgery. The remaining balance, after insurance, went into collections and then a judgement with both our names. I have been divorced for close to 5 years, live in another state, trying to clean up all the financial messes I was left with. I contacted the hospital, billing dept and county clerks offices asking for a signed document from me saying that I would also be financially responsible for his bill. They have none. Is there a law obligating the spouse to this kind of bill even without a signed agreement?
    0 Votes

    • BA
      Apr, 2014
      Bill
      I will assume you were a Wisconsin resident when the events you describe took place because you ask your question on a page covering Wisconsin collection rules.

      The Wisconsin Supreme Court decided in a series of three decisions in the early 1980s that when it comes to debts incurred by a husband or wife for the necessities of life, Wisconsin courts can place primary liability on the husband and secondary liability on the wife, regardless of who incurred the debt. (Estate of Stromsted v. St. Michael Hosp. of Franciscan Sisters, 299 N.W.2d 226, 230 (Wis. 1980) and Marshfield Clinic v. Discher, 314 N.W.2d 326 (Wis. 1982))

      It is likely a Wisconsin court would find that if a spouse's surgery was necessary (and not say, cosmetic and entirely optional) then the doctrine of necessaries rule applies. The creditor would, under Wisconsin law, need to try to collect from the husband first. If that fails, then it could collect from the wife.

      Consult with a Wisconsin lawyer who has civil litigation experience to learn if my quick, and probably incomplete, analysis of Wisconsin's doctrine of necessaries law is complete, and how it applies to you.

      You indicated you reside in Tennessee. If you were a Tennessee resident when the surgery took place, then read the Bills.com Tennessee Collection Laws page to learn more about Tennessee's doctrine of necessaries rule.
      0 Votes