By James F. Guckenberg, Associate Attorney
Wisconsin has two important statutes of limitation that affect creditors attempting to collect from judgment debtors. First, a properly docketed judgment becomes a lien for ten years on all real property the judgment debtor owns or acquires in the county or counties where the judgment is docketed. Second, a creditor has only twenty years from the date judgment is rendered in which to have a county Sheriff attempt to execute on the debtor's property. At first glance, these limitations periods may appear to provide ample time for a creditor to collect a judgment. However, problems arise when a creditor is not able to collect before the limitations periods expire because, for example, the debtor simply does not have sufficient assets or because the creditor belatedly obtained the right to collect the judgment from a prior creditor who failed to actively pursue collection. Fortunately, Wisconsin law provides a remedy that allows a creditor to obtain a new ten-year lien on the debtor's real property and extend the time for execution for an additional twenty years. The remedy involves two steps. First, the creditor must obtain permission from the Court to commence a new legal action against the debtor based on the original underlying judgment. Second, the creditor must file and serve a new lawsuit against the debtor and obtain a new judgment. If the creditor is successful, the new judgment will effectively reset the ten and twenty-year limitations periods.
Obtaining Permission To Commence A New Action. The process of renewing the ten and twenty-year limitations periods for collecting a judgment begins by obtaining the Court's permission to file a new lawsuit based upon the original judgment. The creditor must file a motion requesting permission in the original lawsuit and provide proper notice of the motion to the debtor. The Court will grant the motion only if the creditor can show there is "good cause" for the creditor to be allowed to proceed. The burden for establishing "good cause" is low. The creditor must demonstrate some reason why an action on the original judgment is necessary to enforce the creditor's rights. In most cases, simply establishing that the judgment remains unpaid and one or both of the limitations periods have expired or are about to expire will suffice.
For example, in Meier v. Purdin, the ten-year statute of limitations on judgment liens had expired and the creditor filed a motion asking for permission to bring a new action on the original judgment. The Court adopted the principal that "it is certainly a good [basis] to maintain the second action that the former judgment is about to become barred by the statute of limitations." The Court extended this principal to include situations where the creditor acted after the statute of limitations expired stating, "[l]apse of time cannot be turned from an ingredient of good cause to a reason for finding no good cause." The creditor's motion alleged that the debtor neglected and refused to pay the judgment and the creditor had not previously attempted to execute on the debtor's property because the creditor did not feel the debtor had sufficient property out of which to satisfy the judgment. The Court agreed that the creditor should be allowed to commence a new action upon the original judgment. Similar logic was applied by the Court with regard to the twenty-year limitation on executions in First Wisconsin Nat. Bank of Milwauke v. Rische where the creditor was also allowed to commence a new action upon the original judgment.
Commencing A New Action Upon the Original Judgment. After obtaining the Court's permission to commence a new action, the creditor must file and serve a summons and complaint just as it did in the original underlying action. Just as in the underlying action, the creditor will have to pay a filing fee and incur costs for serving the summons and complaint. The key difference is that the creditor does not have to establish the debtor's liability on the debt by proving the elements of the original underlying lawsuit. Those issues have already been decided and the time for challenging the original judgment will, in most cases, have long since passed. In most cases, the creditor should only need to establish 1) that a valid judgment remains in place against the debtor and in favor of the creditor, 2) that the judgment remains uncollected and the debtor has neglected and refused to pay despite the creditor's demand for payment, 3) the amount of accumulated post-judgment statutory interest and costs, and 4) that a new judgment is necessary in order to enforce the creditor's right to maintain a lien on the debtor's real property and execute on the debtor's real or personal property. If the creditor can prove these elements to the Court's satisfaction, the Court will likely enter a new judgment in favor of the creditor with a new judgment balance. Once the new judgment is entered and properly docketed, a new judgment lien will be in place and the clock will begin ticking for another ten years on the judgment lien and for another twenty years on the creditor's ability to execute upon the judgment. As a note of caution, creditors should be wary about waiting to execute on a judgment. If an initial attempt at execution is not made within five years of the date judgment is rendered, the creditor will still need special permission from the Court to proceed.
Renewing the ten and twenty-year limitations periods for collecting judgments can breathe new life into a creditor's ability to collect a debt. It allows a creditor more time to maintain a lien on the debtor's real property and more time to collect through a sheriff's execution. The procedure for obtaining a new judgment is fairly straightforward and requires a low burden of proof from the creditor. If successful, it can result in the creditor collecting a larger portion of a debt than it otherwise might have.