Wisconsin debt collection laws: How long you have to pay and how to get out of debt

Knowing your rights and obligations is essential if you live in Wisconsin and have debt. When a creditor threatens to sue you, it becomes much more crucial. A creditor is a lender, collection agent, or law company that controls a collection account. According to Wisconsin debt collection laws, creditors have a number of options for obtaining unpaid debt from you. In Wisconsin, a creditor must go to court to obtain a judgment against you before using these legal remedies.

What are the different ways a creditor can collect money from you?

A lawsuit filed by a creditor will result in a court hearing. A judgment may be awarded to the creditor after a hearing. A judgment gives your creditors the right to:

1. Garnish your wage.

2. Put a levy on your accounts.

3. Put a lien on your property.

4. Seize your property.

Laws refer to these as remedies. A judgment creditor is a creditor who has been awarded a judgment. Depending on the situation and Wisconsin law, a judgment creditor may employ one or more instruments.

Below, we go over each of these treatments. Under Wisconsin Statute Chapter 801, the following laws apply in Wisconsin.

Wage garnishment laws in Wisconsin

Wage garnishment is the most popular way for judgment creditors to enforce judgments. Your employer is contacted by a judgment creditor who requests that they take a specific amount out of each pay period and send it to the creditor.

According to debt collection laws in Wisconsin, the amount of your salary that can be garnished by creditors typically ranges between 10% and 25%, depending on the state. Federal law prohibits garnishing Social Security benefits or pensions for consumer debt, although it may be permitted for child support.

Under Chapter 812, wage garnishment is legal in Wisconsin. This subchapter prohibits the garnishment of more than 80% of the debtor's disposable income unless the court provides relief. Wage garnishment may be requested if the judgment creditor is aware of the debtor's place of employment.

20% of the debtor's net income, commonly referred to as disposable income, is subject to garnishment under federal law. As required by Section 812.35(4)(c), service on the debtor must be finished no later than seven business days after the garnishee was served and no later than three business days prior to the payday of the first pay period that will be impacted by the garnishment.

Wisconsin debt collection laws mandate that if the garnishment of 20% of the debtor's disposable income pursuant to subchapter 812.34(2)(c) would cause the debtor's household income to fall below the poverty line, the garnishment amount is limited to the amount of the debtor's household income above the poverty line prior to the commencement of the garnishment.

In addition, no garnishment action may be initiated under Chapter 812.01(4) to recoup the cost or value of alcoholic beverages supplied at retail. According to Wisconsin law, a debtor's earnings can be garnished up to 25% of their income for child support and maintenance.

Bank account levy in Wisconsin

A levy gives the creditor the authority to withdraw any funds from a debtor's account and use them to pay the remaining balance of the judgment. Again, state law controls the process for levying bank accounts as well as the amount, if any, that a debtor may argue is exempt from the levy. A debtor should check their state's legislation to see if a bank account can be assessed, as many states have exemptions for certain quantities and types of funds from bank levies. According to Wisconsin's Chapter 409 of the Uniform Commercial Code Secured Transactions, attachment is permitted.

Lien in Wisconsin

Encumbrance or claim on real estate is known as a lien. According to debt collection laws in Wisconsin, if the debtor owns a home, for instance, a creditor with a judgment can place a lien on the property, obliging the debtor to pay after selling or refinancing the property. A lien may restrict the debtor from selling or refinancing their house if the amount of the judgment exceeds the value of their equity until the judgment is paid off.

In accordance with Wisconsin Chapter 128, Creditor's Actions, a debtor who has had a lien placed against them by a judgment may, within 30 days of the judgment, assign all non-exempt property to the benefit of all creditors. After then, the lien will be released, and the property will be given to the assignee.

According to Wisconsin Chapter 811, a creditor may only seize a debtor's property by having a judge or other judicial official issue a Writ of Attachment at their specific request at any point prior to a final judgment and following the filing of a summons and a complaint.

Foreclosure in Wisconsin

Chapter 846, Real Estate Foreclosure, contains the foreclosure regulations for Wisconsin. A deficiency judgment may also be issued separately under the initial foreclosure judgment, and the party becomes liable after the sale has been confirmed.

Community property law in Wisconsin

Wisconsin is one of the ten states that have the community property law. If you reside in Wisconsin, you can be liable for your spouse's financial obligations. Don't think you must automatically pay your spouse's debt since Wisconsin's community property law is complicated. Additionally, you might be required to pay your spouse's debt under the doctrine of necessities.

Statute of limitations in Wisconsin

The statute of limitations for civil cases differs from state to state. The statute of limitations for open accounts like credit cards and written and oral contracts in Wisconsin is six years under Chapter 893.43. The 10-year statute of limitations applies to promissory notes.

Any attempts to recover debts after the expiry of the statute of limitations are illegal under Wisconsin law. Both original creditors and collection agencies must abide by this rule.

According to Wisconsin debt collection laws, a creditor cannot launch a lawsuit to collect a debt after the Wisconsin statute of limitations has passed. FDCPA will be considered violated if the collection agents bring a lawsuit for debt collection against a customer after the statute of limitations has expired. A cause of action may be created under Wisconsin law and the federal FDCPA if a collection agent or original creditor tries to collect an expired debt by misrepresenting the debt's lawful status. Only Wisconsin and one other state share this consumer-friendly exception to the rule.

The statute of limitations for court decisions in Wisconsin is a little more complex. A judgment in Wisconsin constitutes a lien on all real estate that the judgment-debtor owns or obtains in the county or counties where the judgment is docketed for a period of ten years. To attempt to confiscate the debtor's property, a judgment creditor has 20 years from the judgment date. Wisconsin judgments have 10- and 20-year expiration dates, but they can be extended if the judgment creditor requests permission from the court and re-files an action against the judgment debtor.

How can you get out of debt if you don’t have the money to pay it off?

If you don't have the money to pay off your debt, bankruptcy may be able to provide you with a fresh start.

You may take advantage of two kinds of bankruptcy, Chapter 13 and Chapter 7.

Chapter 7

The full liquidation bankruptcy, known as Chapter 7, involves selling all of your assets, excluding exempt property, to pay off your debts. In Wisconsin, your car and personal items may constitute exempt property. Find out which assets you hold are exempt by conversing with an attorney. You must complete a "means test" to show that you have enough disposable income to pay back some of your debt before filing for Chapter 7. You could have to file Chapter 13 if you do have any extra cash available.

Chapter 13

For filing Chapter 13 bankruptcy, you, your lawyer, and your creditors will need to work together to work out a payment plan for paying back a portion of your debt. Three or five years are available for payback. If you include back payments in the payment plan, filing Chapter 13 can help you avoid losing your property to foreclosure. After the payment time has passed, some unpaid debt may be forgiven.

You shouldn't make the choice to file for bankruptcy hastily. To learn about your alternatives, speak with an attorney.

Conclusion

There are resources available both locally and nationally if you need assistance. Unopened bills now could create a more challenging issue later. Recognize that you have the right to file a complaint against harassing creditors. When you require assistance or instruction regarding debt relief, get in touch with a nonprofit. You should consult a lawyer if you’re contemplating bankruptcy. You may prevent your debt from getting out of control by taking action as early as possible.

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