425.208 Customer's right to redeem.
425.209 Restrictions on deficiency judgments.
425.210 Computation of deficiency.
SUBCHAPTER III
CUSTOMER'S REMEDIES
425.301 Remedies to be liberally administered.
425.302 Remedy and penalty for certain violations.
425.303 Remedy and penalty for certain violations.
425.304 Remedy and penalty for certain violations.
425.305 Transactions which are void.
425.306 Unenforceable obligations.
425.307 Limitation of action.
425.308 Reasonable attorney fees.
425.310 Liability of corporate officers.
425.311 Evidence of violation.
SUBCHAPTER IV
CRIMINAL PENALTIES
425.401 Willful violations: misdemeanor.
Ch. 425 Cross-reference
Cross-reference: See definitions in s.
421.301.
CREDITORS' REMEDIES
425.101
425.101
Short title. This chapter shall be known and may be cited as the Wisconsin consumer act — remedies and penalties.
425.101 History
History: 1971 c. 239.
425.102
425.102
Scope. This subchapter applies to actions or other proceedings brought by a creditor to enforce rights arising from consumer credit transactions and to extortionate extensions of credit under s.
425.108.
425.102 History
History: 1971 c. 239.
425.1025
425.1025
Definition. In this subchapter, “billing statement" means a statement issued pursuant to
15 USC 1637 (b).
425.1025 History
History: 2015 a. 155.
425.103
425.103
Accrual of cause of action; “default". 425.103(1)(1)
Notwithstanding any term or agreement to the contrary, no cause of action with respect to the obligation of a customer in a consumer credit transaction shall accrue in favor of a creditor except by reason of a default, as defined in sub.
(2).
425.103(2)
(2) “Default", with respect to a consumer credit transaction, means without justification under any law:
425.103(2)(a)
(a) With respect to a transaction other than one pursuant to an open-end plan and except as provided in par.
(am); if the interval between scheduled payments is 2 months or less, to have outstanding an amount exceeding one full payment which has remained unpaid for more than 10 days after the scheduled or deferred due dates, or the failure to pay the first payment or the last payment, within 40 days of its scheduled or deferred due date; if the interval between scheduled payments is more than 2 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, 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. For purposes of this paragraph the amount outstanding shall not include any delinquency or deferral charges and shall be computed by applying each payment first to the installment most delinquent and then to subsequent installments in the order they come due;
425.103(2)(am)
(am) With respect to an installment loan not secured by a motor vehicle made by a licensee under s.
138.09 or with respect to a payday loan not secured by a motor vehicle made by a licensee under s.
138.14; to have outstanding an amount of one full payment or more which has remained unpaid for more than 10 days after the scheduled or deferred due date. For purposes of this paragraph the amount outstanding shall not include any delinquency or deferral charges and shall be computed by applying each payment first to the installment most delinquent and then to subsequent installments in the order they come due;
425.103(2)(b)
(b) With respect to an open-end plan, failure to pay when due on 2 occasions within any 12-month period;
425.103(2)(bm)
(bm) With respect to a motor vehicle consumer lease or a consumer credit sale of a motor vehicle, making a material false statement in the customer's credit application that precedes the consumer credit transaction; or
425.103(2)(c)
(c) To observe any other covenant of the transaction, breach of which materially impairs the condition, value or protection of or the merchant's right in any collateral securing the transaction or goods subject to a consumer lease, or materially impairs the customer's ability to pay amounts due under the transaction.
425.103(3)
(3) A cause of action with respect to the obligation of a customer in a consumer credit transaction shall be subject to this subchapter, including the provisions relating to cure of default (ss.
425.104 and
425.105).
425.103(4)
(4) A cause of action arising from a transaction which resulted in the creation of a security interest in personal property shall also be subject to the limitations provided in subch.
II.
425.103 Annotation
When a lender was promptly informed that a borrower had a valid disability insurance claim that would cover payments, it was an unconscionable practice to include an unpaid monthly charge that would be covered by the disability insurance in computing the unpaid balance for purposes of establishing default. Bank One Milwaukee, N.A. v. Harris,
209 Wis. 2d 412,
563 N.W.2d 543 (Ct. App. 1997),
96-0903.
425.103 Annotation
Under sub. (2) (a), when payments are scheduled less than 2 months apart, a consumer is in default when an amount greater than one full payment remains unpaid for over 10 days, not when a single payment is unpaid for more than 10 days. Indianhead Motors v. Brooks,
2006 WI App 266,
297 Wis. 2d 821,
726 N.W.2d 352,
06-1002.
425.103 Annotation
This section does not create a right for consumers to enforce when a merchant includes a particular provision in a loan agreement. Rather, it limits the circumstances in which a merchant can sue a customer for defaulting on a loan. Nelson v. Santander Consumer USA, Inc.
931 F. Supp. 2d 919 (2013).
425.103 Annotation
Creditor's remedies under the Wisconsin consumer act. 1973 WBB No. 6.
425.104
425.104
Notice of customer's right to cure default. 425.104(1)(1)
A merchant who believes that a customer is in default may give the customer written notice of the alleged default and, if applicable, of the customer's right to cure any such default (s.
425.105).
425.104(2)
(2) Any notice given under this section shall contain the name, address and telephone number of the creditor, a brief identification of the consumer credit transaction, a statement of the nature of the alleged default and a clear statement of the total payment, including an itemization of any delinquency charges, or other performance necessary to cure the alleged default, the exact date by which the amount must be paid or performance tendered and the name, address and telephone number of the person to whom any payment must be made, if other than the creditor.
425.104 History
History: 1971 c. 239.
425.104 Annotation
Notice need not be given if the obligation is entirely past due and fully owed, making it impossible for the customer to restore the loan to current status. Rosendale State Bank v. Schultz,
123 Wis. 2d 195,
365 N.W.2d 911 (Ct. App. 1985).
425.104 Annotation
The s. 425.105 (1) prohibition of suits except when notice is given pursuant to s. 425.104 imposes timing and content requirements for the notice. A notice that did not meet the timing requirements of ss. 425.103 (2) (a) and 425.104 (1) never gave notice “pursuant to s. 425.104." Thus suit was barred by s. 425.105 (1). Indianhead Motors v. Brooks,
2006 WI App 266,
297 Wis. 2d 821,
726 N.W.2d 352,
06-1002.
425.105(1)(1)
A merchant may not accelerate the maturity of a consumer credit transaction, commence any action except as provided in s.
425.205 (6), or demand or take possession of collateral or goods subject to a consumer lease other than by accepting a voluntary surrender thereof (s.
425.204), unless the merchant believes the customer to be in default (s.
425.103), and then only upon the expiration of 15 days after a notice is given pursuant to s.
425.104 if the customer has the right to cure under this section.
425.105(2)
(2) Except as provided in subs.
(3) and
(3m), for 15 days after such notice is given, a customer may cure a default under a consumer credit transaction by tendering the amount of all unpaid installments due at the time of the tender, without acceleration, plus any unpaid delinquency or deferral charges, and by tendering performance necessary to cure any default other than nonpayment of amounts due. The act of curing a default restores to the customer the customer's rights under the agreement as though no default had occurred.
425.105(3)
(3) A right to cure shall not exist if the following occurred twice during the preceding 12 months:
425.105(3)(a)
(a) The customer was in default on the same transaction or open-end credit plan;
425.105(3)(b)
(b) The creditor gave the customer notice of the right to cure such previous default in accordance with s.
425.104; and
425.105(4)
(4) With respect to consumer credit transactions in which the creditor has a security interest in, and possession of, instruments or documents, as each is defined in s.
409.102 (1), which threaten to decline speedily in value, this section does not restrict the creditor's rights to dispose of such property pursuant to subch.
VI of ch. 409 and the terms of the creditor's security agreement.
425.105 Annotation
The s. 425.105 (1) prohibition of suits except when notice is given pursuant to s. 425.104 imposes timing and content requirements for the notice. A notice that did not meet the timing requirements of ss. 425.103 (2) (a) and 425.104 (1) never gave notice “pursuant to s. 425.104." Thus suit was barred by s. 425.105 (1). Indianhead Motors v. Brooks,
2006 WI App 266,
297 Wis. 2d 821,
726 Wis. 2d 352,
06-1002.
425.105 Annotation
A creditor's failure to send a notice of default and right to cure letter is merely a failure to comply with a procedural requirement that warrants dismissal of the creditor's action against the debtor. The failure does not disrupt the creditor's right to payment from the debtor. Security Finance v. Kirsch,
2019 WI 42,
386 Wis. 2d 388,
926 N.W.2d 167,
17-1408.
425.105 Annotation
The requirement that a creditor provide a notice of right to cure default is a procedural hurdle creditors must clear in order to pursue their remedies. The appropriate remedy for a creditor's failure to comply with this procedural requirement is dismissal of the creditor's action. Beal v. Wyndham Vacation Resorts, Inc.,
956 F. Supp. 2d 962 (2013).
425.106(1)(1)
Except to the extent that the merchant has a valid security interest which is permitted by chs.
421 to
427 and
429 or has a lien under ch.
779 in such property, or where the transaction is for medical or legal services and there has been no finance charge actually imposed, the following property of the customer shall be exempt from levy, execution, sale, and other similar process in satisfaction of a judgment for an obligation arising from a consumer credit transaction:
425.106(1)(b)
(b) Clothing of the customer or his or her dependents, and the following: dining table and chairs, refrigerator, heating stove, cooking stove, radio, beds and bedding, couch and chairs, cooking utensils and kitchenware and household goods as defined in
12 CFR 227.13 (d),
12 CFR 535.1 (g) or
16 CFR 444.1 (i) consisting of furniture, appliances, one television, linens, china, crockery and personal effects including wedding rings, except works of art, electronic entertainment equipment, antiques and jewelry, to the extent a nonpossessory security interest in these household goods is prohibited under
12 CFR 227.13 (d),
12 CFR 535.2 (a) (4) or
16 CFR 444.2 (a) (4);
425.106(1)(c)
(c) Real property used as the principal residence of the customer or the customer's dependents, to the extent that the fair market value of such property, less all amounts secured by mortgages and liens outstanding against it, is $15,000 or less; and
425.106(1)(d)
(d) Earnings or other assets of the customer which are required to be paid by the customer as restitution under s.
973.20.
425.106(2)
(2) With respect to process against marital property in satisfaction of a judgment for an obligation described under s.
766.55 (2) (b) arising from a consumer credit transaction, each spouse is entitled to and may claim the exemptions under sub.
(1). Each spouse is entitled to one exemption under sub.
(1) (c). That exemption is limited to the specified maximum dollar amount, which may be combined with the other spouse's exemption in the same property or applied to different property included under the same exemption.
425.106(3)
(3) Nothing in this section shall be construed to displace other provisions of law which afford additional or greater protection to the customer.
425.106(4)
(4) An order or process in violation of this section is void.
425.106 Note
NOTE: As to sub. (2), see notes in
1985 Wis. Act 37, marital property trailer bill.
425.107(1)(1)
With respect to a consumer credit transaction, if the court as a matter of law finds that any aspect of the transaction, any conduct directed against the customer by a party to the transaction, or any result of the transaction is unconscionable, the court shall, in addition to the remedy and penalty authorized in sub.
(5), either refuse to enforce the transaction against the customer, or so limit the application of any unconscionable aspect or conduct to avoid any unconscionable result.
425.107(2)
(2) Specific practices forbidden by the administrator in rules promulgated pursuant to s.
426.108 shall be presumed to be unconscionable.
425.107(3)
(3) Without limiting the scope of sub.
(1), the court may consider, among other things, the following as pertinent to the issue of unconscionability:
425.107(3)(a)
(a) That the practice unfairly takes advantage of the lack of knowledge, ability, experience or capacity of customers;
425.107(3)(b)
(b) That those engaging in the practice know of the inability of customers to receive benefits properly anticipated from the goods or services involved;
425.107(3)(c)
(c) That there exists a gross disparity between the price of goods or services and their value as measured by the price at which similar goods or services are readily obtainable by other customers, or by other tests of true value;
425.107(3)(d)
(d) That the practice may enable merchants to take advantage of the inability of customers reasonably to protect their interests by reason of physical or mental infirmities, illiteracy or inability to understand the language of the agreement, ignorance or lack of education or similar factors;
425.107(3)(e)
(e) That the terms of the transaction require customers to waive legal rights;
425.107(3)(f)
(f) That the terms of the transaction require customers to unreasonably jeopardize money or property beyond the money or property immediately at issue in the transaction;
425.107(3)(g)
(g) That the natural effect of the practice would reasonably cause or aid in causing customers to misunderstand the true nature of the transaction or their rights and duties thereunder;
425.107(3)(h)
(h) That the writing purporting to evidence the obligation of the customer in the transaction contains terms or provisions or authorizes practices prohibited by law; and
425.107(3)(i)
(i) Definitions of unconscionability in statutes, regulations, rulings and decisions of legislative, administrative or judicial bodies.
425.107(4)
(4) Any charge or practice expressly permitted by chs.
421 to
427 and
429 is not in itself unconscionable but even though a practice or charge is authorized by chs.
421 to
427 and
429, the totality of a creditor's conduct may show that such practice or charge is part of an unconscionable course of conduct.
425.107(5)
(5) In addition to the protections afforded in sub.
(1), the customer shall be entitled upon a finding of unconscionability to recover from the creditor or the person responsible for the unconscionable conduct a remedy and penalty in accordance with s.
425.303.
