April 2015

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By Matthew J. Richburg, Managing Shareholder
President, Wisconsin Creditors’ Rights Association

There are two sets of bills pending before the Wisconsin State Legislature that are of particular interest to the collection industry during the current 2015-2016 legislative session.  The first is a proposed interest rate change on unpaid small claims judgments (i.e. judgments for claims of $10,000 or less).  The second is a proposed amendment to the pleading requirements involving consumer credit cases. 


            Assembly Bill 95 & Senate Bill 76 have been introduced in the Wisconsin Legislature to statutorily change the interest rate on judgments and settlement offers (back) to 12% for small claims cases only.  The interest rate on judgments and settlement offers in Wisconsin was recently statutorily changed from 12% to 1% plus prime (currently 3.25%) effective December 2, 2011 for all judgments.1  Since that time, the interest rate has not changed because the prime rate has remained at 3.25%. This results in an effective rate of 4.25%.  Therefore, any judgments entered after December 1, 2011 to present day, or settlement offers that were rejected, have accrued interest at 4.25%.


            Proponents of the change argue that the amendment to the law would help businesses more effectively recoup their bad debt losses.  Additionally, a lower interest rate of 4.25% is arguably a disincentive to pay back debt, since borrowing money at rate at or below the current 4.25% is difficult to do, or provides a nominal net dollar benefit to the customer.  When the interest rate was 12%, many judgment debtors could obtain a loan for much less than 12%, which provided an incentive to pay off judgments whenever borrowing money at a significantly lower rate was possible.


            The second set of bills of note are Assembly Bill 117 and Senate Bill 92.  Those bills center on clarifying the pleadings statute for consumer credit cases.2   First, the proposed statutory amendment clarifies that the pleadings requirements for consumer cases also apply to merchants (i.e. original creditors and assignees), when it previously only applied to creditors (i.e. original creditors).  Second, the amendment seeks to clarify certain requirements relating to what information and attachments must be included in a consumer credit complaint.  The current statutes states that a complaint must contain the “figures necessary for computation of the amount due,” and the customer must be provided the “writings evidencing any transaction” upon written request by the customer.  The proposed amendment is more specific than the current statutory language in that it states that the complaint must identify a figure that matches a dollar amount that appeared on a periodic statement sent to the customer, as well as containing a breakdown of all charges, interest, and payments after that statement date.   For the writings evidencing requirement, it would be satisfied if, upon written request, the merchant provides the customer with a copy of the statement referenced in the complaint.  Finally, the amendment clarifies that a complaint that fails to comply with the pleading requirements does not give rise to a penalty, or civil liability, unless by preponderance of the evidence it is proven that the failure to comply was willful or intentional.


            Proponents of these changes argue that they provide clear and concise requirements that leave no room for ambiguity, so as to avoid any unnecessary litigation over what is required to be identified in a consumer credit complaint or provided to a consumer defendant upon written request.                                  


            Kohn Law Firm S.C. continues to be closely involved in monitoring pending legislating and promoting legislative efforts that support creditors’ rights in the State of Wisconsin.  The firm is a founding member of the Wisconsin Creditors’ Rights Association, which is a non-profit corporation consisting of Wisconsin law firms whose practices focus on debt collection and creditors’ rights.

1Wis. Stat. § 815.05(8)

2Wis. Stat. § 425.109

Posted: 4/10/2015 8:28:03 AM by Tom Connor | with 0 comments