Will Wisconsin Become More Debt Collector Friendly?

The Wisconsin government might give a major favor to agencies that make money collecting debts in the state. A law that is waiting for Gov. Scott Walker’s signature would make it less risky for debt collectors to pursue debtors in court and harder for debtors to prove that the debt collection actions against them are not warranted.

This is a measure that was squashed in 2014 when the legislature said it would cause too much harm to consumers. However, an almost identical version of the bill with bipartisan support in 2015 didn’t come with the same warnings and that has now led to the law being placed on the Governor’s desk.

Basically, the bill would lower the standard of proof that collectors have to have in court when seeking action against a person they say owes them money. This is just one of the facets of the law that would lower the amount of risk collectors face when taking a matter to court.

When a collector wins a case in court, they are able to start taking out liens on private property or garnishing wages. This is difficult for the person who may or may not owe the debt.

Right now, Wisconsin consumer laws require the collectors to define how they arrived at the dollar amount they say is owed by the debtor. The new bill, however, would ease those requirements, allowing collectors to simply state an amount owed without providing the details.

Eliminating this requirement would erase one of the best ways to catch the errors that collectors do make. The collector’s explanation of the dollar amount they are collecting has always been the best way to prove that some kind of error or fraud may be taking place. That would be gone if the bill becomes law.

The proponents of the bill say they want to do away with confusing conflicts in how the current law is interpreted. However, the collections industry benefits from the language. The collections agencies that buy debts from original creditors for pennies on the dollar and then go after debtors for the full amount owed to the original creditor would be able to pursue people in court. The current law says only the original creditor can pursue a debtor in court.

Proponents also say that the third-party collectors are an essential part of the economy. Using hospitals and private lenders as examples, they say that they are able to recover a fraction of what they are owed because of collections agencies. By recovering a fraction, they can preserve their current billing practices and how much credit they extend to their own customers.

However, there is an issue that occurs when a debt goes to a third-party collector. When one doesn’t collect on the debt, the debt may be sold and then re-sold until the information becomes shaky. This can result in a debtor never getting a summons to court. Addresses change, typos happen, and information gets lost. This can result in a default judgment that leads to a consumer having their wages garnished and them not knowing why.

If the bill becomes law, it is important to seek the help of a collections and consumer attorney to help prove when a debt is not legitimate or when a collector commits a violation of state or federal debt collection laws.