AB 301

Under current law, a person must be licensed by the Division of Banking

(division) in the Department of Financial Institutions to originate or service a payday

loan involving a Wisconsin resident. A "payday loan" is defined as a transaction

between an individual with an account at a financial establishment and another

person (payday lender) in which the payday lender agrees to accept a check or

electronic fund transfer (EFT) authorization from the individual, to delay

negotiating the check or initiating the EFT for a period of time, and to extend a loan

to the individual for a term of 90 days or less.

Also under current law, a lender other than a bank, savings bank, savings and

loan association, or credit union generally must obtain a license from the division to

assess a finance charge for a consumer loan that is greater than 18 percent. This type

of lender is generally referred to as a "licensed lender." A "consumer loan" is a loan

made to an individual for personal, family, or household purposes that is payable in

installments or for which a finance charge may be imposed.

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