LRB-2555/1
ARG:sac:jm
2013 - 2014 LEGISLATURE
August 23, 2013 - Introduced by Representatives Hintz, Barnes, Kolste, Goyke,
Bewley, Johnson, Bernard Schaber, Shankland, Mason, Sinicki, Berceau,
Zepnick, Richards, Wright, Pope, Doyle, Young, Kahl, Wachs, Clark,
Jorgensen, Ohnstad, Hebl, Milroy, Billings and Barca. Referred to Joint
Committee on Finance.
AB301,1,2
1An Act to repeal 425.103 (2) (am); and
to amend 425.103 (2) (a) of the statutes;
2relating to: defaults on payday loans and loans by licensed lenders.
Analysis by the Legislative Reference Bureau
Under current law, a person must be licensed by the Division of Banking
(division) in the Department of Financial Institutions to originate or service a payday
loan involving a Wisconsin resident. A "payday loan" is defined as a transaction
between an individual with an account at a financial establishment and another
person (payday lender) in which the payday lender agrees to accept a check or
electronic fund transfer (EFT) authorization from the individual, to delay
negotiating the check or initiating the EFT for a period of time, and to extend a loan
to the individual for a term of 90 days or less.
Also under current law, a lender other than a bank, savings bank, savings and
loan association, or credit union generally must obtain a license from the division to
assess a finance charge for a consumer loan that is greater than 18 percent. This type
of lender is generally referred to as a "licensed lender." A "consumer loan" is a loan
made to an individual for personal, family, or household purposes that is payable in
installments or for which a finance charge may be imposed.
Under current law, a consumer credit transaction in which the amount financed
is $25,000 or less, and which is entered into for personal, family, or household
purposes, is generally subject to the Wisconsin Consumer Act (WCA). A "consumer
credit transaction" is generally a transaction in which property, services, or money
is acquired on credit and the consumer's obligation is payable in installments or a
finance charge may be imposed. The WCA includes requirements for a creditor to
satisfy to enforce rights arising from a consumer credit transaction that is subject to
the WCA. Under the WCA, a creditor's cause of action against a consumer to enforce
the consumer's obligation in a consumer credit transaction accrues only upon default
by the consumer. In general, a default in a consumer credit transaction means the
following: 1) if the interval between scheduled payments is two months or less, to
have outstanding an amount exceeding one full payment that has remained unpaid
for more than ten days after the scheduled or deferred due dates or to fail to pay the
first or last payment within 40 days of its scheduled or deferred due date; 2) if the
interval between scheduled payments is more than two months, to have all or any
part of one scheduled payment unpaid for more than 60 days after its scheduled or
deferred due date; or 3) if the transaction is scheduled to be repaid in a single
payment, to have all or any part of the payment unpaid for more than 40 days after
its scheduled or deferred due date. However, as created in
2013 Wisconsin Act 20,
default in a consumer credit transaction, not secured by a motor vehicle, involving
an installment loan by a licensed lender or a payday loan by a payday lender means
having outstanding an amount of one full payment or more that has remained
unpaid for more than ten days after the scheduled or deferred due date.
This bill repeals the default provision specific to installment loans by licensed
lenders and payday loans that was created in
2013 Wisconsin Act 20.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB301,3,43
425.103
(2) (a) With respect to a transaction other than one pursuant to an
4open-end plan
and except as provided in par. (am); if the interval between scheduled
5payments is 2 months or less, to have outstanding an amount exceeding one full
6payment which has remained unpaid for more than 10 days after the scheduled or
7deferred due dates, or the failure to pay the first payment or the last payment, within
840 days of its scheduled or deferred due date; if the interval between scheduled
9payments is more than 2 months, to have all or any part of one scheduled payment
10unpaid for more than 60 days after its scheduled or deferred due date; or, if the
11transaction is scheduled to be repaid in a single payment, to have all or any part of
12the payment unpaid for more than 40 days after its scheduled or deferred due date.
1For purposes of this paragraph the amount outstanding shall not include any
2delinquency or deferral charges and shall be computed by applying each payment
3first to the installment most delinquent and then to subsequent installments in the
4order they come due;
