Repossession Laws In Wisconsin
In Wisconsin, a consumer’s vehicle may be subject to repossession if they fail to make scheduled payments on their loan. Once a consumer is in default, their creditor may have the opportunity to take back the item that secures the loan. Although they can conduct a repossession, the creditor must follow Wisconsin’s guidelines on carrying out a lawful repossession. Understanding these state-specific laws can benefit a consumer if they are threatened with repossession.
Is breach of the peace illegal in Wisconsin?
Yes. In Wisconsin, a repossession will be considered unlawful if the repossession company breaches the peace during the act. The law regarding a breach of the peace places restrictions on the actions of a company during a repossession. Under this law, actions that are prohibited include the use of violence or physical force, the use of threats or intimidation, and the use of police intervention without a proper warrant. During a repossession, the repossession company is also not allowed to break into private property to take a vehicle. They are allowed to seize a vehicle if it is parked outside a consumer’s house or on an open driveway but they cannot forcibly enter a closed garage or secured area. At any time during the repossession, the consumer has the ability to ask for the repossession to be stopped and for the company to leave their property. The company can risk rendering the repossession unlawful if they continue on with their actions despite a consumer’s objections. In order to minimize the risk of a breach of the peace, it is normal for repossession companies to conduct repossessions at night where the property owner may not be awake to disturb them. However, in this case, a breach of the peace can still occur. If the consumer’s property was damaged as a result of the company’s actions, the repossession may have been unlawful.
Is a pre-repossession notice required to be sent to a consumer?
Yes. In order to be able to repossess a consumer’s vehicle, creditors in Wisconsin must first send a pre-repossession notice by mail that informs the consumer of their default and of the right to cure the default. After sending this notice, creditors must give the consumer a 15-day period to cure the default in which they cannot repossess the vehicle. The consumer can cure the default by making up their missed payments and covering any late fees. If they cannot cure the default, the creditor will have the right to repossess their vehicle after the 15 days have passed. However, if the consumer believes that they are not in default or if they object to the repossession, they can make a written demand for a court proceeding. The demand must still be made in the same 15-day period.
What can a consumer do after repossession has occurred?
There are still strict guidelines that the creditor must follow after they have repossessed the vehicle.
The creditor should provide the consumer with the storage location for the vehicle so that the consumer can retrieve any personal items that they may have left inside. The creditor is not allowed to keep or sell any of these items but they can keep attachments that are now a part of the vehicle such as stereo systems and luggage racks.
Following the repossession, the consumer has the option to reinstate their pre-default contract if the original loan they began with was $25,000 or under. They are given a period of 15 days after the date of the repossession to reinstate their pre-default contract. In order to do this, they would have to pay back all of their missed payments plus any late fees or costs and also provide a deposit that is three times the price of their monthly payment. If the consumer’s original loan was greater than $25,000, they will only be able to redeem the vehicle and receive its title by paying off the remainder of their total balance.
If the consumer cannot reinstate their pre-default contract or redeem the vehicle, the creditor can choose to keep or sell the vehicle. If the consumer already paid more than 60 percent of their loan and the creditor wants to keep the vehicle, they can demand a sale instead. Before a sale is held, the consumer should be provided with a pre-sale notice that tells them where and when the sale will occur. The creditor must sell the vehicle in a commercially reasonable manner. If they accept an unreasonably low price for the vehicle, this could indicate that their conduct was unlawful. Following the sale, the creditor should send the consumer another notice that provides them with the vehicle’s final selling price and any balance that remains on their loan. The money from the sale should first be used to pay off the creditor’s costs associated with the repossession or sale before they are used towards the consumer’s debt. If there is an excess of funds after the debt has been paid off, the creditor should give the consumer the profit. If the money is not enough to fully cover the debt, the consumer may have to owe the difference, which is also called the deficiency balance. However, in Wisconsin, if the deficiency amount is $1,000 or less, the consumer would not have to pay it.
What happens if a consumer’s vehicle was wrongly repossessed?
If the creditor did not adhere to Wisconsin’s guidelines on repossession, it is possible that the consumer’s vehicle was unlawfully repossessed. This may have occurred if the consumer was not sent a pre-repossession notice, if they were not given the full amount of time to cure the default or reinstate their contract, or if they were not sent a pre- or post-sale notice. In these situations, the consumer would not have to pay a deficiency balance. The repossession may have also been unlawful if the repossession company breached the peace or repossessed the wrong vehicle. These actions may constitute a violation of the Fair Debt Collection Practices Act (FDCPA), a federal law that protects consumers against abusive debt collection actions. Pursuant to the FDCPA, the repossession company could have to pay the consumer compensation of up to $1,000 in statutory damages and they may also have to cover their legal fees and any costs.
Where can a consumer look for help or for answers to their questions?
A consumer protection agency in the state that the consumer resides in, their state’s Office of the Attorney General, and/or a consumer protection attorney who is licensed in a consumer’s respective state can assist a consumer in getting help and/or determining the answers to their questions in regard to the aforementioned laws. The Consumer Financial Protection Bureau can also be of assistance to consumers.
Can a repossession company repossess the wrong vehicle without breaking the law?
No. The repossession company is only legally allowed to repossess the vehicle that is secured by the consumer’s loan. It is illegal if they repossess the incorrect vehicle.
What will happen to the vehicle after the repossession?
Each state has its own laws regarding the disposition of the vehicle but generally, a creditor can choose to sell the vehicle at either a public or private sale or they can keep the vehicle as full payment of the consumer’s debt. However, if the creditor decides to keep the vehicle, the consumer can demand for the vehicle to be sold instead.
What will happen to the vehicle after the repossession?
Each state has its own laws regarding the disposition of the vehicle but generally, a creditor can choose to sell the vehicle at either a public or private sale or they can keep the vehicle as full payment of the consumer’s debt. However, if the creditor decides to keep the vehicle, the consumer can demand for the vehicle to be sold instead.
Can a consumer retrieve their personal items from the repossessed vehicle?
Yes. The consumer should contact their creditor in order to recover their items. While the creditor is not allowed to keep or sell a consumer’s personal goods, they may be able to keep any items that are considered to be attachments to a vehicle (eg. luggage racks and stereo systems).
Is it possible for a consumer to reclaim a vehicle after it has been repossessed?
Yes. In order to take back a vehicle, a consumer can either reinstate the loan or redeem the vehicle. Some states will allow the consumer to reinstate the loan by paying back all of their missed payments, as well as any late fees and costs accrued by their creditor. If they successfully reinstate the loan, the consumer will be able to restore their pre-default rights. If the state does not allow the consumer to reinstate the loan, they still have the opportunity to redeem the vehicle. They can do this by paying off the entire amount that remains on their loan (not just the missed payments) and any additional fees or costs as well. In most cases, the consumer will have up until the day of the vehicle’s disposition to reinstate the loan or redeem the vehicle.
Should a creditor notify a consumer of the vehicle’s sale?
It depends on the state. In some states, the creditor is required to send the consumer a pre-sale notice in a reasonable amount of time prior to the sale, and the notice should include information in it such as the date, time, and location of the sale.
Is the sale required to be “commercially reasonable”?
Yes. All aspects of the sale should be conducted in a commercially reasonable manner. If the vehicle ends up selling for a price that is significantly lower than its average market value, the creditor may be held liable for unlawful conduct.
Should a creditor send a consumer a notice after the sale has occurred?
Notice requirements vary by state but in general, the creditor should provide the consumer with a post-sale accounting that provides them with information about the vehicle’s final selling price, how these funds will be applied to their debt, and the amount of any surplus or debt that is left over.
How is the money that is received from the sale used?
The money earned from the sale is first used to pay off any reasonable costs that the creditor accrued during the repossession, storage, or sale. Afterwards, the remainder is then used to pay off the consumer’s debt.
Will a consumer still owe money after the sale?
It is possible that the consumer may still owe money after the sale of the vehicle. If the money earned from the sale is not enough to fully pay for their debt, they may have to pay for the deficiency balance, which is the amount of their remaining debt.
What happens if there is a surplus?
If a surplus of funds remains after the consumer’s debt has been paid for, the creditor must provide them with the leftover money.
Is it possible that a consumer’s vehicle was wrongfully repossessed?
Yes. A consumer’s vehicle may have been wrongfully repossessed if their creditor did not abide by their respective state’s repossession laws. If the repossession was unlawful, then depending on the state, the consumer may not have to pay for the deficiency balance. It is also possible that the repossession company violated the Fair Debt Collection Practices Act (FDCPA) – a federal law that protects consumers from debt collectors who act unlawfully – by breaching the peace during the repossession, by repossessing the incorrect vehicle, or by illegally trespassing on the consumer’s property if that is illegal in their respective state. If a violation of the FDCPA occurred, pursuant to the Act, the repossession company would have to pay the consumer compensation of up to $1,000 in statutory damages and cover their legal fees and any costs.
Should a consumer contact a lawyer if they believe that their vehicle was wrongfully repossessed?
Yes. A consumer should contact a law firm licensed to practice law in the state that the consumer resides in, that pursues companies that conduct illegal repossessions in order to try to attain justice and damages for consumers. Many law firms offer free initial consultations. A consumer can also try to contact the Consumer Financial Protection Bureau (CFPB), and/or the Attorney General’s Office in their respective state. Some Attorney General’s Offices have consumer protection divisions which also may be able to help consumers.
Businesses should not engage in predatory practices that violate your rights. If you need help, call our law firm, Rights Protection Law Group, PLLC, at CALL for more information and possible assistance.