SB 613

This bill creates provisions governing the determination of whether a breach

of the peace occurs when collateral or leased goods are repossessed, and creates

immunity from liability for a person who repossesses vehicles under certain

circumstances.

Under current law, a consumer credit transaction that is entered into for

personal, family, or household purposes is generally subject to the Wisconsin

Consumer Act (WCA). A consumer credit transaction, which includes consumer

loans and consumer credit sales, means in part a transaction between a merchant

and a customer who acquires money or personal property on credit. A merchant is

defined to include a creditor or a seller of personal property on credit. The WCA

includes provisions relating to enforcement of a merchant's security interest in

collateral resulting from a consumer credit transaction, including repossession of the

collateral. With exceptions, a merchant may take possession of collateral or leased

goods only if a judgment for the merchant has been entered for recovery of the

collateral or leased goods. However, a merchant may proceed without a judgment in

repossessing collateral that is a motor vehicle if certain requirements are met,

including giving notice to the debtor and law enforcement and the elapse of at least

15 days since both the debtor's default and the merchant's notice to the debtor. Under

the WCA, “[i]n taking possession of collateral or leased goods, no merchant may . .

. [c]ommit a breach of the peace.”

Current law also adopts the Uniform Commercial Code (UCC) Article 9 -

Secured Transactions, which governs transactions that involve the granting of credit

secured by personal property of a debtor, and UCC Article 11 - Leases, which governs

the lease of movable personal property (goods). Under UCC Article 9, if a debtor

defaults, the secured party may take possession of the collateral “if it proceeds

without breach of the peace” or proceeds through judicial process. Under UCC

Article 11, for most defaults by a lessee under a lease contract, the lessor may

repossess the goods subject to the lease contract, without judicial process, “if it can

be done without breach of the peace.”

This bill creates provisions that govern the determination of whether a breach

of the peace occurs with respect to repossession of collateral or leased goods by, as

applicable, the merchant, secured party, or lessor (together referred to as “creditor”)

under the WCA and UCC. The bill specifies that the creditor or its authorized

repossessor may not commit a breach of the peace and that the conduct or activities

of the customer, debtor, or lessee, or any bystander, may not be considered in

determining whether a breach of the peace has occurred. Under the bill, an

“authorized repossessor” is defined as a person employed by a creditor or authorized

to act as an agent by a creditor, or an independent contractor hired by a creditor or

the independent contractor's employee, for the purpose of taking possession of the

collateral or leased goods.