- 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 debts 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 Served Summons and Complaint to learn more about this process, and how to fight a lawsuit.
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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 Chapter 801 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.
How Much of Your Pay Can Be Taken?
In most states, creditors may garnish between 10% and 25% of your wages, with the percentage allowed determined by state law. Garnishment of Social Security benefits or pensions for consumer debt is not allowed under federal law, but may be allowed for child support. See the Bills.com Wage Garnishment article to learn more.
In Wisconsin, wage garnishment is allowed under Chapter 812 (PDF). Unless the court grants relief under § 812.38 (2) or par. (b) or (c) 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 Chapter 812.35(4)(c), 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 812.34(2)(c) 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 Chapter 812.01(4) 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 Chapter 409 (PDF).
If you reside in another state, see the Bills.com Account Levy resource to learn more about the general rules for this remedy.
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 Chapter 128 (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 Chapter 811 (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 Liens & How to Resolve Them article to learn more.
Wisconsin Statute of Limitations
Each state has its own statute of limitations on civil matters. Under Wisconsin Chapter 893.43 (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 FDCPA 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)).
Strong Protection for Wisconsin Consumers
Collection agents violate the FDCPA 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 laws can be found in Chapter 846 (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 doctrine of necessaries may obligate you to pay your spouse’s debt. Read the Bills.com article Wisconsin Community Property to learn more.
Wisconsin Vehicle Repossession
Read the Wisconsin Bar Association’s article Wisconsin’s New Automobile Repossession Law: Creditors in the Driver’s Seat to learn more about Wisconsin’s repossession laws.
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 Legal Action of Wisconsin or another Wisconsin pro bono program to find no- or low-cost legal services.
Dealing with debt
If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2023 was $17.503 trillion. Student loan debt was $1.601 trillion and credit card debt was $1.129 trillion.
According to data gathered by Urban.org from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 8% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.
The amount of debt and debt in collections vary by state. For example, in Alabama, 34% have any kind of debt in collections and the median debt in collections is $1798. Medical debt is common and 16% have that in collections. The median medical debt in collections is $851.
Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.