Attorney Deanne Koll explains what the Wisconsin Consumer Act is and how it affects your lending practices.
Disclaimer: This video is designed to be educational and informative, but it is not legal advice. Collection law is constantly evolving and subject to change. Each situation is unique, and each case should be addressed to fit the unique situation.
The Wisconsin Consumer Act is a state law that regulates consumer credit transactions and consumer debt collection. Consumer credit transactions include transactions that either include a finance charge or are payable in more than four installments. An example of a consumer credit transaction covered by the Wisconsin Consumer Act would be a car loan or a second real estate mortgage.
Not all credit transactions, however, are covered by the Wisconsin Consumer Act. Transactions for more than $25,000, transactions that are secured by a first lien against real estate and transactions not involving consumer — in other words, business transactions — are not covered by the Wisconsin Consumer Act.
It is important for lenders to be aware of the Wisconsin Consumer Act, because it creates specific requirements for disclosures in credit contracts, limits interest charges and provides a time period for the consumer to cancel certain contracts.
These issues are usually clearly outlined in the credit transactions forms used by lenders. What is not so clearly outlined for lenders are the prohibitions and restrictions on collection activities when a consumer defaults.
For example, the Wisconsin Consumer Act outlines when a Notice of Right to Cure Default may be sent, it outlines a customer’s right to cure even after an action has commenced for collection, it outlines when fees and costs can be assessed against a defaulting customer and outlines how to obtain a deficiency judgment against a customer in a lawsuit.
A lender should be sure to comply with all of the rules and regulations in collection on credit transactions covered by the Wisconsin Consumer Act so as to avoid the strict penalties which can be assessed for violations. Some penalties include statutory damages, attorney’s fee shifting, as well as actual damages incurred.