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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.

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80 Comments

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  • AS
    Oct, 2018
    alex

    Some time in 2011, a disgruntled delinquent taxpayer who I was collecting on found my social security number and leaked it on the internet. This ruined my credit score to the point where I was looking at bankruptcy and losing my job as a Revenue Agent as a result. In 2014 I did finally lose my job and the ability to repay any of the debts that other people accumulated in my name. What is worse is that the Madison Police Department does not seem to consider white collar crime such as identity theft a "true" crime because they have "murders and gangs" to investigate so at some point I just stopped reporting various credit cards that have been opened up in my name and without my consent. This is one those accounts. How can I tell? Old address on file. I was never served with my correct address. I did not have the benefit of these funds. I tried to get CACH LLC people to realize that and get this to go away in the easiest way possible, by pleading out a no AFS , but apparently, these folks just want to harass me further, and did a Publication service, so they're really nasty. Any advice on how to defend against a debt that's not yours?

    0 Votes

    • 35x35
      Oct, 2018
      Daniel

      I am sorry to hear the problems you are having as a result of someone else's malfeasance.  The two pieces of advice I have are ones that would have made sense when the problem first reared its head:

      1. Go the FTC's Identity Theft website, making sure that you took the steps advised there.
      2. Speak with an attorney. I would have strongly advised that at the first hint that your job was in jeopardy, but it is no less a wise choice now.

      Good luck.

      0 Votes

  • DL
    Sep, 2018
    Donna

    A debit collection agency bought old credit card debit. This agency is pursuing me in small claims court for a debit they cannot provide evidence who opened the account or paperwork of merchandise bought or signatures. What is the statue of limitations in Wisconsin for old credit card debit?? I believe it is 6 years after the last transaction. The last transaction on this account was August of 2012. I have a court date October 24th 2018 this will be the fourth or fifth time I have had to appear for this matter. The last judge dismissed the case bc of lack of evidence. The debit collector appealed and October 24th is the new court date with a new judge. What are my options to end this once and for all?? If the statue of limitations for old credit card debt expires after 6 years wouldn't the judge dismiss this case immediately??

    0 Votes

    • 35x35
      Sep, 2018
      Daniel

      The statute of limitations starts running on the date of default, the date that your payment is late. You are correct that the SOL for debt in Wisconsin is six years.

      It is not the date of the trial that is used for figuring if  the SOL expired. It is the date the lawsuit is formally filed with the court. As long as the creditor filed suit before the six years, then the SOL did not expire.

      The reason for optimism I see in what you wrote is that If one judge dismissed the case because lack of evidence, unless new evidence is provided, it seems reasonable to hope that the new judge will view the matter similarly.

      Good luck!

      0 Votes

      • DL
        Sep, 2018
        Donna

        Which brings me to the next question. New evidence. The debt collector mailed me a questionnaire after he filed the appeal. One question I had to answer was "what banks have you had withdrawal power"? I answered his question along with 39 more. My question is...………..how long do banks normally keep records?? This account he is trying to collect on is dated 1998 to 2012. August of 2012 was the last transaction on this account. I also would like to add I closed this bank account in 2013 since then the bank has changed names two times.

        0 Votes

        • 35x35
          Sep, 2018
          Daniel

          I don't think there is a one-size-fits-all answer for how long all banks keep records. For one, the length of time can vary from institution to institution. Also, the type of account may influence how long the records are retained. I believe, from what I have read, that banks are not likely to have records after seven years, but, again, it could be shorter.

          0 Votes

  • 35x35
    Aug, 2018

    in 2008 the bank foreclosed on my business. There was a mortgage that secured the business loans. The bank has never tried to collect the old business debt or the mortgage which is registered. No judgements. No action by the bank until now. Now they want the business loans from 2008 paid and the mortgage paid. They have just sent letters and e mails...still no legal action. Does the 6 year limitation apply to business loan? To mortgage? (mortgage calls for payment being due at time of default of the business loans...but again bank has never tried to collect.)

    0 Votes

    • 35x35
      Aug, 2018
      Daniel

      On principle, which I will explain, I will not answer your question. The principle is that questions of this gravity should not be answered by web research. Go see a lawyer. ASAP. The harm you potentially face is so great, prudence dictates that you get an authoritative answer.

      0 Votes

  • LD
    Aug, 2018
    Lynda

    I have WIsonsin Energy company filed a judgement for a bill from 2007. I was unaware of this bill still being out there. I was surprised they could get a judgement after 11 years. They did not even contact me. Can I fight this ? Isn't it past the statue of limitations? Thank you.

    0 Votes

    • 35x35
      Aug, 2018
      Daniel

      I will share some information with you with the understanding that you don't consider it legal advice, as only an attorney can properly give legal advice.

      It is worthwhile for you to raise the SOL issue, if you can get in front of the court that issued the judgment. Given that a judgment is in place, move as fast as you can, as a wage levy in Wisconsin could lead to 25% of your income, after mandatory deductions are taken, being levied.

      The  firm probably attempted to contact you, but you were not at the address they had. The creditor may have reason to argue that the SOL should not have been running, due to some action you took that tolled the statute.

      If you need to use the services of the utility company in the future, you will probably need to clear out this debt or you will not get approved for service.

       

       

      0 Votes

  • MH
    May, 2018
    Mel

    I live in WI and I have an old judgement against me for 30K to a large insurance company. This was from a criminal property damage incident 9 years ago. My lawyer and I talked with someone from the insurance company and discussed that I had no assets, a very small income, and I had agreed to pay them $30/month. I never did make those payments and once I grew up enough to care to do so I didn't have any of the paperwork anymore and didn't even know how to pay. My credit report shows nothing in regards to this. On CCAP this case says "filed only" and still has my old address listed from which I have moved 5 times now. Also on CCAP there is an additional note saying "last paper document noted 1/1/2016" and a listed Judgment/lien date of 8/10/2010. I haven't received anything since that meeting 9 years ago in regards to paying the debt. I am starting to consider buying a home soon and I don't know if I'm better off to contact them and offer them something less like $5000 to settle the debt to prevent a lien on my future home or to just keep ignoring it since it seems like they don't care enough to pursue it and contacting them could agitate that. I would like to know if it's normal for insurance company to ignore this kind of lawsuit for a decade and then readdress it? It's my understanding that they have no info on my current employment, bank account balance, or when I purchase assets, and they would need to have contact with me for that info, is this correct?

    0 Votes

    • 35x35
      May, 2018
      Daniel

      Only an attorney can properly give legal advice, so please don't consider what I share legal advice.

      A judgment lasts for 20 years in WI, according to my understanding. I think when you try to get a loan to buy a home a lender will require that the judgment be satisfied. You could contact the judgment holder and try to negotiate a settlement, but there is some risk that they would not settle and begin to aggressively pursue collections.

      0 Votes

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