Defaults on payday loans and loans by licensed lenders

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 .