The Wisconsin Consumer Act is an important state law which was passed to provide protections for consumers in credit transactions and debt collection. Among other things, the law limits interest and non-interest charges in credit transactions; establishes the right to cancel certain types of contracts; requires judicial intervention for certain types of repossession; and requires disclosures of specific information in credit contracts and advertising
New legislation signed by Governor Walker last month made changes to the pleading requirements under the law for a creditor to enforce its rights stemming from a credit transaction. Those changes are decidedly in favor of debt collectors, and make it easier for debt buyers to go after consumer debts.
Among other things, the measure changes the requirement that a merchant seeking to collect debt under an open-end credit plan must provide evidence of transactions, and only requires that the merchant provide a billing statement with the total outstanding balance on it. In addition, the bill includes the new requirement that a consumer may not sue a debt collector or obtain attorney’s fees when the debt collector initiates a complaint which fails to meet the pleading requirements under the law unless the consumer proves the creditor’s failure to meet the pleading requirements was intentional or willful. In effect, then, the law makes it easier for debt collectors to validate debts and makes it harder for debtors to punish creditors who pursue baseless claims in court.
Debt collection, of course, can be a major burden on debtors, and debtors should be aware of their right to be free from illegal and abusive collection practices. For debtors who are financially troubled enough to be considering bankruptcy, one of the benefits of pursuing such relief from the perspective of debt collection is the so-called automatic stay. In our next post, we’ll look a bit more at the automatic stay of bankruptcy and its usefulness to debtors.