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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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72 Comments

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  • 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

  • 35x35
    Jan, 2018

    What is the statue of limitations for a personal judgment in Wisconsin? My dad was involved a bad commercial real estate deal that went belly up. Foreclosure happened in almost 10 years ago and there was a significant deficiency judgment against him (over $250k) - which he never paid or even got contacted to pay.

    0 Votes

    • 35x35
      Jan, 2018
      Daniel

      I can't give you legal advice. Please take this answer as what I believe to be true, but don't consider it legal advice.

      A court ordered judgment is enforceable for 20 years in Wisconsin. 

      From what you wrote, however, it is not clear to me what transpired. If a lender had a deficiency judgment for $250,000, it would generally try to collect via attachment of earnings, bank accounts, or assets.

      I recommend that your father takes any paperwork he has about the judgment and other correspondence from the lender or anyone trying to collect on the debt and go see a lawyer.

      0 Votes

  • SB
    Dec, 2016
    Sean
    While living in a non-community property state my spouse incurred a sizable debt, while were married, and then was sued and she now has a judgment against her. I was not sued and there is no judgment against me - presumably because not being in a common-law state at the time and the debt being uniquely hers. This debt simply is never going to get paid - whether she outruns it or files bankruptcy. That being said - if we move (we are still married) to Wisconsin will I be putting myself in jeopardy of having it become legally "my" debt, or "our" debt, as opposed to how it is now which is "her" debt? To sum up - the debt was incurred in a non-community property state, the judgment is from a non-community property state court, and I am not named on the judgment nor has it been reported anywhere on my credit report for the last five years since the judgment was issues against her. This is further complicated by the fact that we actually plan to legally separate but currently live in a state that requires a one-year physical separation before the court will sign off on a legal separation and we don't wish to live apart (for religious reasons and the sake of the children) but instead just return to the status of not legally married. My wife suffers from mental illness and it would be great if we could move to Wisconsin where she has a much better family support system but I have very few resources left (disabled child as well) and cannot risk becoming at risk for this debt.
    0 Votes

    • 35x35
      Apr, 2017
      Daniel

      The fact pattern is so complicated that you should speak with a lawyer to get an authoritative answer.

      Here are my thoughts, but they are not to be considered legal advice. I believe that WI collection laws will govern the collection of the debt, once you establish residency. It is my belief that the liability for the debt is not related to WI law, but where the debt was incurred. 

      0 Votes

  • MH
    Jun, 2014
    marsha
    Franklin, WI
    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

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