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CHAPTER 425
CONSUMER TRANSACTIONS — REMEDIES AND PENALTIES
SUBCHAPTER I
CREDITORS' REMEDIES
425.101   Short title.
425.102   Scope.
425.1025   Definition.
425.103   Accrual of cause of action; “default".
425.104   Notice of customer's right to cure default.
425.105   Cure of default.
425.106   Exempt property.
425.107   Unconscionability.
425.108   Extortionate extensions of credit.
425.109   Pleadings.
425.110   No discharge from employment for garnishment.
425.111   Levy before judgment.
425.112   Stay of execution.
425.113   Body attachments.
SUBCHAPTER II
ENFORCEMENT OF SECURITY INTERESTS IN COLLATERAL
425.201   Scope.
425.202   Definitions.
425.203   Enforcement of merchant's rights in collateral and leased goods.
425.204   Voluntary surrender of collateral.
425.205   Action to recover collateral.
425.206   Nonjudicial enforcement limited.
425.2065   Notice to law enforcement.
425.207   Restraining order to protect collateral or leased goods; abandoned property.
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.
425.309   Class actions.
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.
subch. I of ch. 425 SUBCHAPTER I
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.
425.102 Annotation The scope language of this section bars a customer from bringing a claim of unconscionability under s. 425.107 except in response to “actions or other proceedings brought by a creditor." Discussing whether a nonjudicial repossession pursuant to s. 425.206 (1) (d) is such an action or other proceeding. Duncan v. Asset Recovery Specialists, Inc., 2022 WI 1, 400 Wis. 2d 1, 968 N.W.2d 661, 19-1365.
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 two months apart, a consumer is in default when an amount greater than one full payment remains unpaid for over ten days, not when a single payment is unpaid for more than ten 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 Wisconsin Consumer Act. WBB Dec. 1973.
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 this section imposes timing and content requirements for the notice. A notice that did not meet the timing requirements of sub. (1) and s. 425.103 (2) (a) never gave notice “pursuant to” this section. 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.
425.104 Annotation Courts construe sub. (2) strictly, so even minor defects or omissions are enough to render a notice of right to cure invalid. Bahena v. Jefferson Capital Systems, LLC, 363 F. Supp. 3d 914 (2019).
425.104 Annotation Billing statements are not sufficient to give notice of a right to cure to an unsophisticated consumer, so they cannot qualify as right-to-cure notices under sub. (2). Bahena v. Jefferson Capital Systems, LLC, 363 F. Supp. 3d 914 (2019).
425.104 Annotation This section establishes requirements regarding what information a right-to-cure notice must contain, and it is permissive in the sense that it does not obligate merchants to send such notices whenever a customer defaults. But s. 425.105 lays out the requirements for merchants who wish to sue on a default, and s. 425.105 (1) makes providing notice a mandatory prerequisite to suit. Bahena v. Jefferson Capital Systems, LLC, 363 F. Supp. 3d 914 (2019). See also Boerner v. LVNV Funding LLC, 358 F. Supp. 3d 767 (2019).
425.105 425.105 Cure of default.
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.
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