Use this debt collection guide to build a clear demand letter for Madison.
Debt Collection Rights in Madison: A Complete Wisconsin Guide
If you're being contacted by debt collectors in Madison, Wisconsin, you have significant legal protections under both federal and state law. The stress of dealing with collection calls, letters, and threats can be overwhelming, but understanding your rights can help you regain control. Whether you're a UW-Madison student dealing with old credit card debt, a professional facing medical bills, or a resident dealing with any type of debt collection, Wisconsin law provides tools to protect yourself from abusive practices and demand proper treatment.
Wisconsin has enacted specific consumer protection laws that complement the federal Fair Debt Collection Practices Act (FDCPA). The Wisconsin Consumer Act, found in Chapters 421-427 of the Wisconsin Statutes, provides additional protections for Wisconsin consumers. Combined with federal law, Madison residents have powerful rights when facing debt collectors, including the right to demand validation of debts, stop harassing communications, and sue collectors who violate the law.
Debt collection issues in Madison span all demographics. Students and recent graduates often face pressure from student loan servicers and credit card companies. Families deal with medical debt from UW Health, SSM Health, and other healthcare providers. Homeowners may face collection on utility bills, property-related debts, or deficiencies from foreclosures. Regardless of the type of debt, the same fundamental consumer protections apply.
This comprehensive guide will walk you through Wisconsin's debt collection laws, explain your rights and how to exercise them, provide step-by-step instructions for responding to debt collectors, identify critical deadlines including statutes of limitations, and help you understand your options for resolving or disputing debts. Understanding these protections is your first step toward handling debt collection with confidence.
Wisconsin Debt Collection Laws: Your Legal Foundation
Wisconsin provides consumers with substantial protections against abusive debt collection through a combination of state and federal laws. Understanding this framework is essential for Madison residents facing collection activity.
**Federal Fair Debt Collection Practices Act (FDCPA) - 15 U.S.C. Section 1692**
The FDCPA is the primary federal law regulating debt collectors. It prohibits abusive, unfair, and deceptive practices. Key provisions:
**Who It Covers:**
- Third-party debt collectors (collection agencies, debt buyers)
- Attorneys who regularly collect debts
- Does NOT cover original creditors collecting their own debts (state law may cover these)
**Prohibited Practices Under FDCPA:**
*Harassment and Abuse (Section 1692d):*
- Threats of violence or harm
- Use of obscene or profane language
- Repeated phone calls intended to annoy or harass
- Publication of "deadbeat" lists
*False or Misleading Representations (Section 1692e):*
- Falsely claiming to be attorneys or government officials
- Misrepresenting the amount owed
- Threatening actions they cannot legally take or don't intend to take
- False claims about consequences of non-payment
*Unfair Practices (Section 1692f):*
- Collecting amounts not authorized by law or agreement
- Depositing post-dated checks early
- Threatening seizure of property without legal right
**Required Disclosures (Section 1692g):**
Within 5 days of initial contact, collectors must provide:
- Amount of debt
- Name of creditor
- Statement that consumer can dispute within 30 days
- Statement that verification will be provided if disputed
- Statement that consumer can request original creditor's name
**Wisconsin Consumer Act - Chapters 421-427**
Wisconsin's Consumer Act provides additional protections beyond federal law:
**Section 427.104 - Prohibited Debt Collection Practices:**
Wisconsin prohibits specific practices including:
- Contacting employers except to verify employment
- Disclosing debt information to third parties (with exceptions)
- Using harassing or threatening tactics
- Making false representations about debts or consequences
**Section 425.107 - Limitations on Deficiency Judgments:**
For certain consumer credit transactions, Wisconsin limits creditors' rights to seek deficiency judgments after repossession.
**Wisconsin Statutes of Limitations for Debt**
The statute of limitations determines how long a creditor has to sue you for a debt:
- **Written contracts (including most credit cards): 6 years** (Section 893.43)
- **Oral agreements: 6 years** (Section 893.43)
- **Promissory notes: 6 years** (may be longer for certain notes)
- **Judgments: 20 years** (and can be renewed)
The clock typically starts from the date of default or last payment. After the statute of limitations expires, collectors can no longer sue you, though they may still attempt collection.
**Time-Barred Debt Rules**
Important considerations for old debts:
- Collectors cannot sue on time-barred debts
- Making a payment can restart the statute of limitations in some cases
- Collectors must be truthful about whether they intend to sue
- Under the FDCPA, threatening to sue on time-barred debt may be illegal
**Wisconsin Exemptions from Collection - Section 815.18**
Wisconsin protects certain assets from collection:
- Homestead exemption: Up to $75,000 equity in your home
- Vehicle exemption: Up to $4,000
- Household goods: Up to $12,000 total
- Wages: 80% of disposable earnings or 30x federal minimum wage (whichever is greater)
- Social Security, pension benefits, unemployment compensation (generally exempt)
These exemptions protect assets even after a judgment is entered.
**Collection on Judgments**
If a creditor obtains a judgment in Wisconsin:
- They can garnish wages (up to 20% of disposable earnings)
- They can levy bank accounts (subject to exemptions)
- They can place liens on property
- Judgments are valid for 20 years and renewable
**Wisconsin Department of Financial Institutions (DFI)**
DFI regulates certain creditors and collection agencies in Wisconsin. While they don't resolve individual disputes, they can provide information and accept complaints about licensed entities.
Step-by-Step Guide to Handling Debt Collection in Madison
Successfully managing debt collection requires systematic action to protect your rights and resolve the situation. Follow these steps:
**Step 1: Don't Panic, but Don't Ignore**
Receiving collection notices is stressful, but ignoring them makes things worse. Take a breath, then take action. You have rights, and exercising them properly puts you in control.
**Step 2: Document Everything**
From the first contact, create a record:
- Note the date, time, and nature of every contact
- Save all letters and notices
- Record who called and what was said (keep a call log)
- Take screenshots of any text messages
- Never throw away any documents related to the debt
**Step 3: Verify the Collector's Identity**
Get information about who is contacting you:
- Company name and address
- Individual collector's name
- Phone number and callback information
- Their relationship to the original creditor
- Is it the original creditor or a third-party collector?
**Step 4: Request Debt Validation**
Under the FDCPA, you have the right to demand proof of the debt. Within 30 days of the collector's first contact:
- Send a written request for debt validation
- Ask for: proof you owe the debt, the amount, the original creditor's name, and proof they have authority to collect
- Send via certified mail with return receipt requested
- The collector must stop collection efforts until they provide validation
If you miss the 30-day window, you can still request validation, but the collector doesn't have to stop collection activities.
**Step 5: Check the Statute of Limitations**
Determine if the debt is time-barred:
- Calculate when you last made a payment or acknowledged the debt
- Wisconsin's statute of limitations is generally 6 years for most debts
- If the debt is time-barred, collectors cannot sue you
- Be careful: making a payment can restart the clock
**Step 6: Review Your Credit Report**
Check your credit report for the debt:
- Get free reports at annualcreditreport.com
- Verify the debt amount and creditor match what the collector claims
- Note any discrepancies for your records
- Time-barred debts may still appear on credit reports (typically for 7 years from first delinquency)
**Step 7: Know Your Communication Rights**
You can control how collectors communicate with you:
- You can request they only contact you in writing
- You can designate specific times they can call
- You can request they stop contacting you entirely (cease and desist)
- They cannot contact you at work if you tell them it's prohibited
- They cannot contact third parties except to locate you
**Step 8: Send a Cease and Desist Letter if Desired**
If you want communications to stop:
- Send a written cease and desist letter
- Send via certified mail with return receipt requested
- After receiving it, collectors can only contact you to confirm they're stopping or to inform you of specific actions
- Note: This doesn't make the debt go away; it only stops communication
**Step 9: Evaluate Your Options**
Decide how to handle the debt:
*If you don't owe the debt:*
- Dispute in writing with documentation
- Dispute with credit bureaus if it's on your report
*If the debt is time-barred:*
- You can inform the collector in writing
- Don't make payments that could restart the clock
- They cannot sue, though they can continue asking for payment
*If you owe the debt and can pay:*
- Consider negotiating a settlement for less than the full amount
- Get any settlement agreement in writing before paying
- Request deletion from credit reports as part of settlement
*If you owe but can't pay:*
- Evaluate whether bankruptcy protection is appropriate
- Understand what assets are protected by Wisconsin exemptions
- Consider consulting with a credit counselor or attorney
**Step 10: Document Any Violations**
If the collector violates the law:
- Document the specific violation (harassment, false statements, etc.)
- Note dates, times, and witnesses
- Save any evidence (recordings if legal, letters, etc.)
- You may have a claim for damages
**Step 11: File Complaints if Necessary**
Report violations to:
- Consumer Financial Protection Bureau (CFPB): consumerfinance.gov
- Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP): (800) 422-7128
- Federal Trade Commission (FTC): ftc.gov
- Wisconsin Department of Financial Institutions (DFI)
**Step 12: Consider Legal Action**
If collectors violate your rights:
- You can sue under the FDCPA and Wisconsin law
- FDCPA allows recovery of actual damages, statutory damages up to $1,000, and attorney's fees
- Many consumer attorneys take these cases on contingency
- Small claims court handles claims up to $10,000
Essential Evidence for Madison Debt Collection Disputes
Thorough documentation is essential for debt collection disputes. Whether you're disputing a debt, challenging collector violations, or defending against a lawsuit, evidence determines outcomes. Here's what to gather:
**1. Collector Communication Records**
Document every interaction with collectors:
**2. Your Written Communications**
**3. Debt Documentation**
**4. Validation Response Evidence**
**5. Statute of Limitations Evidence**
**6. Credit Report Documentation**
**7. Violation Evidence**
If you're claiming collector violations:
**8. Financial Situation Documentation**
**9. Third-Party Evidence**
**10. Legal Proceedings Documentation**
**Organization Best Practices**
Critical Deadlines for Wisconsin Debt Collection
Meeting deadlines is crucial when dealing with debt collectors. Missing key dates can cost you important rights. Here are the critical timelines:
**Statute of Limitations for Debt Collection Lawsuits**
The time a creditor has to sue you varies by debt type:
**Written Contracts (most credit cards, personal loans): 6 years**
Wisconsin Statutes Section 893.43 provides a 6-year limitation period for written contracts.
**Oral Agreements: 6 years**
Section 893.43 also covers oral agreements with a 6-year period.
**Promissory Notes: 6 years**
Most promissory notes have a 6-year limitation, though some may differ.
**Judgments: 20 years**
Once a creditor obtains a judgment, it's enforceable for 20 years and can be renewed.
**When the Clock Starts**
The exact starting point can be complex. Wisconsin courts generally look to when the cause of action accrued.
**Actions That May Restart the Clock**
*Making a payment:* Even a small payment can restart the statute of limitations in Wisconsin.
*Written acknowledgment:* A written promise to pay or acknowledgment of the debt may restart the clock.
*Partial payment:* Any payment toward the debt can be considered acknowledgment.
Be extremely careful about making any payments or written promises on old debts.
**30-Day Debt Validation Period**
**Response Deadlines if Sued**
If a collector files a lawsuit against you:
**Court Hearing Dates:** Must appear at all scheduled hearings or risk default.
**Credit Reporting Time Limits**
**FDCPA Lawsuit Deadline**
**Wisconsin Consumer Act Deadline**
**Best Practices for Deadline Management**
Common Mistakes to Avoid in Madison Debt Collection
Madison consumers facing debt collection often make preventable mistakes that worsen their situation. Avoid these common errors:
**Mistake 1: Ignoring Collection Contacts**
Ignoring collectors doesn't make debts disappear. They may sue you, and if you don't respond to a lawsuit, they'll get a default judgment. Always respond appropriately - whether by disputing, negotiating, or asserting your rights. Even if you can't pay, engaging protects you.
**Mistake 2: Not Requesting Debt Validation**
Many people assume they owe what collectors claim without verification. Debt buyers often have incomplete records or pursue debts that aren't owed. Always request validation in writing within 30 days of first contact. This is your right, and it often reveals problems with the collector's claims.
**Mistake 3: Making Payments on Time-Barred Debts**
Making any payment on an old debt can restart the statute of limitations in Wisconsin. Before paying anything on old debts, determine whether they're time-barred. If the 6-year limitation has passed, the collector can't sue you - unless you restart the clock by paying.
**Mistake 4: Providing Financial Information**
Collectors may ask about your employment, bank accounts, and assets. You're not required to provide this information, and doing so helps them if they later seek to garnish or levy. Be cautious about what you disclose.
**Mistake 5: Agreeing to Payment Plans Without Written Confirmation**
Verbal agreements aren't reliable. Collectors may claim you agreed to amounts you didn't, or misapply payments. Get any agreement in writing before sending money. A written settlement should specify: total amount, payment schedule, that it's full satisfaction, and any credit reporting commitments.
**Mistake 6: Not Recording or Documenting Calls**
Wisconsin is a one-party consent state, meaning you can legally record calls you're part of without telling the collector. If collectors harass or threaten you, recordings are powerful evidence. At minimum, keep detailed notes of every call.
**Mistake 7: Believing Threats Without Verification**
Collectors may threaten lawsuits, wage garnishment, or arrest. Many threats are false or exaggerated. Arrest for civil debts is generally illegal. Garnishment requires a court judgment first. Verify any threat before panicking. If threats are false, they may violate the FDCPA.
**Mistake 8: Not Understanding Time-Barred Debt Rules**
Collectors can continue contacting you about time-barred debts, even though they can't sue. They may also legitimately ask you to pay. Understand the difference: they can ask, but they can't sue or threaten to sue. If they do, that may be a violation.
**Mistake 9: Failing to Respond to Lawsuits**
Many people don't respond to collection lawsuits because they know they owe the debt. But responding doesn't mean admitting you owe - it means preserving your right to dispute the amount, raise defenses, and negotiate. Default judgments eliminate your options.
**Mistake 10: Not Checking for Errors**
Collectors frequently pursue wrong amounts, wrong people, or already-paid debts. Never assume the collector is correct. Request validation, compare to your records, and dispute errors. Mistaken debt collection is more common than people realize.
**Mistake 11: Paying with Access to Bank Accounts**
Some collectors request electronic access to your bank account for payments. This is risky - they may withdraw more than agreed or continue withdrawing after the debt is paid. Use money orders or cashier's checks instead.
**Mistake 12: Not Understanding Your Exemptions**
Wisconsin exempts significant assets from collection: $75,000 home equity, $4,000 vehicle, 80% of wages, Social Security, and more. Many people assume all their assets are at risk. Understanding exemptions helps you evaluate your actual exposure.
**Mistake 13: Not Filing Complaints for Violations**
Collectors violate the law frequently. Many consumers don't complain, which allows bad actors to continue. Report violations to the CFPB, DATCP, and FTC. You may also have a legal claim worth pursuing.
**Mistake 14: Handling Complex Situations Alone**
For significant debts, lawsuits, or repeated violations, professional help is valuable. Consumer attorneys often work on contingency for FDCPA violations. Bankruptcy attorneys offer free consultations. Don't assume you can't afford help.
Frequently Asked Questions About Debt Collection in Madison
Wisconsin's statute of limitations for most debts, including credit cards and personal loans, is 6 years under Section 893.43. This period typically runs from the date of default or last payment. After 6 years, collectors cannot sue you to collect the debt. However, be careful: making a payment can restart the clock. Judgments have a 20-year limitation and can be renewed.
Yes, but only after obtaining a court judgment. Even then, Wisconsin protects 80% of your disposable earnings or 30 times the federal minimum wage (whichever is greater). This means most people cannot have more than 20% of their disposable income garnished. Additionally, Social Security, unemployment, and certain other benefits are exempt from garnishment.
Send a written request within 30 days of the collector's first contact. Your letter should state you're disputing the debt and requesting validation. Ask for: proof you owe the debt, the original creditor's name, the amount owed, and proof the collector has authority to collect. Send via certified mail with return receipt requested. The collector must stop collection until they provide validation.
Yes. Under the FDCPA, you can send a written cease and desist letter requesting the collector stop contacting you. After receiving it, they can only contact you to confirm they're stopping or to notify you of specific actions (like filing a lawsuit). Note that this doesn't make the debt go away - it only stops communication. Send via certified mail with return receipt.
Document every instance of harassment: dates, times, what was said, witnesses. Wisconsin is a one-party consent state, so you can record calls. Then: (1) Send a cease and desist letter; (2) File complaints with the CFPB, Wisconsin DATCP, and FTC; (3) Consider consulting a consumer attorney - you may have claims for damages under the FDCPA (up to $1,000 statutory damages plus actual damages and attorney's fees).
Only if the debt is within the 6-year statute of limitations. If more than 6 years have passed since default or last payment, the debt is time-barred and collectors cannot successfully sue you. However, they can still ask you to pay voluntarily. Be careful: making any payment can restart the clock. If sued on a time-barred debt, raise the statute of limitations as a defense.
If you don't respond to a lawsuit within the deadline (typically 20 days), the collector will obtain a default judgment. This means: they win automatically without you presenting defenses; they can garnish your wages and bank accounts; they can put liens on your property; the judgment is valid for 20 years. Always respond to lawsuits, even if you owe the debt - you may have defenses or room to negotiate.
Under the FDCPA, collectors can contact third parties only to locate you - and even then, they generally can't reveal you owe a debt. They cannot contact your employer about the debt itself (though they can verify employment). They cannot tell family members about your debt. If they do, this is likely an FDCPA violation. Wisconsin law provides additional restrictions on third-party contacts.
What to Expect When Settling Debt Collection in Madison
Understanding the settlement process helps Madison consumers negotiate with debt collectors effectively. Most collection matters can be resolved through negotiation if you understand the dynamics.
**Why Collectors Settle**
Collectors often accept less than the full amount because:
- They bought the debt for pennies on the dollar
- Litigation is expensive and uncertain
- Some payment is better than none
- They have volume quotas to meet
- Time-barred debts are uncollectible through courts
**Typical Settlement Ranges**
*Recent debts with original creditors:*
- Settlement for 70-90% of balance is common
- Original creditors have more invested
*Third-party collectors:*
- Often settle for 25-50% of claimed balance
- May accept 10-25% for old debts
- The older and harder to collect, the lower the settlement
*Time-barred debts:*
- Collectors have no legal leverage
- If you choose to pay, significant discounts are possible
- Consider whether paying makes financial sense
**Negotiation Strategies**
*Start lower than you can afford:*
- If you can pay $2,000, start at $1,000
- Collectors expect negotiation
- Let them make counter-offers
*Emphasize your limitations:*
- Explain financial hardship honestly
- They'll accept what they think they can get
- Don't reveal your full capacity
*Lump sum vs. payment plan:*
- Lump sum typically gets better discounts
- Payment plans may be necessary but give less leverage
- Never agree to automatic withdrawals
*Get everything in writing:*
- Settlement amount
- Payment terms
- That it's full satisfaction of the debt
- Agreement to delete from credit reports (if possible)
- Date by which payment must be received
**What to Include in Settlement Agreements**
Your written settlement should specify:
1. Total settlement amount
2. This amount is full and final satisfaction
3. No further collection activity after payment
4. Credit reporting will show "paid in full" or "settled" (or deleted)
5. Release of all claims related to this debt
6. Payment deadline and method
**Credit Reporting Considerations**
When negotiating, consider the credit impact:
- "Paid in Full" looks better than "Settled"
- Some collectors will agree to delete the tradeline entirely
- Get any credit reporting commitment in writing
- Paid collections still appear on credit reports unless deleted
**Tax Implications**
Forgiven debt over $600 may be taxable income:
- Collector must send 1099-C for cancelled debt
- You may owe taxes on the forgiven amount
- Exceptions exist for insolvency and bankruptcy
- Consult a tax professional for significant amounts
**After Settlement**
- Make payment as agreed (certified funds recommended)
- Keep proof of payment forever
- Monitor credit reports for accuracy
- Follow up if they don't update as agreed
- Keep settlement letter in case they sell the debt again
Madison Debt Collection Resources and Contacts
Madison consumers have access to numerous resources for debt collection issues:
**Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP)**
Handles consumer complaints including debt collection issues.
- Consumer Protection Hotline: (800) 422-7128
- Madison Office: 2811 Agriculture Drive, Madison, WI 53708
- Website: datcp.wi.gov
- Services: Complaint investigation, mediation, consumer education
**Consumer Financial Protection Bureau (CFPB)**
Federal agency overseeing debt collection practices.
- Website: consumerfinance.gov
- Submit complaints online
- Services: Complaint handling, enforcement, consumer education
**Federal Trade Commission (FTC)**
Enforces the FDCPA and handles complaints.
- Website: ftc.gov
- Complaint submission: ftc.gov/complaint
**Legal Aid Society of Dane County**
Free legal assistance for income-qualifying residents.
- Phone: (608) 233-0023
- Website: www.legalaction.org
- Services: Legal advice and representation
**Dane County Small Claims Court**
For FDCPA claims up to $10,000 or defending against collection suits.
- Location: Dane County Courthouse, 215 South Hamilton Street, Madison, WI 53703
- Phone: (608) 266-4311
- Filing fees: $94.50 - $164.50
**Wisconsin State Bar Lawyer Referral Service**
Find consumer protection attorneys.
- Phone: (800) 362-9082
- Website: wisbar.org
**Credit Counseling Agencies (HUD-Approved)**
Non-profit debt counseling and management.
- GreenPath Financial Wellness: (800) 550-1961
- InCharge Debt Solutions: (877) 251-1882
**Free Credit Reports**
Annual free reports from all three bureaus.
- Website: annualcreditreport.com
- Phone: (877) 322-8228
**Wisconsin Department of Financial Institutions**
Regulates certain financial services companies.
- Phone: (608) 261-9555
- Website: wdfi.org
**National Association of Consumer Advocates (NACA)**
Find consumer attorneys specializing in debt collection.
- Website: consumeradvocates.org
**Bankruptcy Resources**
If debt is overwhelming:
- Wisconsin Western District Bankruptcy Court: (608) 264-5178
- Find bankruptcy attorneys through State Bar Lawyer Referral
The Debt Collection Playbook
Proof is Power
Contracts, invoices, texts, emails… gather all evidence of the debt.
Time is Your Ally (and Their Enemy)
Interest accrues. Late fees may apply. The longer they wait, the more they may owe.
Track Every Penny
Principal, interest, late fees… don't miss a dollar.
The Debtor's Options
Many states allow you to recover collection costs, including attorney fees in some cases. Know your rights.
Wisconsin Debt Collection Laws
Applicable Laws
- FDCPA
- Wisconsin Consumer Act - Wis. Stat. § 427
Small Claims Limit
$10,000
Consumer Protection Agency
Wisconsin DFI / CFPB
Collection Combat FAQ
When should I send a demand letter?
After the second broken payment promise. Don't let them string you along indefinitely.
What if they ignore my demand?
Small claims court is your next step. The filing fee is often recoverable, and you don't need a lawyer.
How do I prove they owe me money?
Contracts, invoices, text messages, emails, bank transfers, promissory notes, or witness statements all help prove the debt.
Can I charge interest?
Yes, if your contract includes interest terms. Even without a contract, many states allow pre-judgment interest on debts.
What about collection costs?
Many contracts allow recovery of collection costs and attorney fees. Check your agreement and state law.
Is there a time limit to collect?
Yes. Statutes of limitation vary by state and debt type, typically 3-6 years. File suit before the deadline expires.
What if they claim they already paid?
Demand proof. Bank records, cancelled checks, or receipts should show payment. If they can't prove it, they still owe you.
About FreeDemandLetter
FreeDemandLetter provides free, AI-powered demand letter generation with location-specific legal citations. Our content is reviewed by subject matter specialists and regularly updated to reflect current laws. We help thousands of people resolve disputes effectively—but we're not lawyers, and this isn't legal advice. For complex situations, consult a licensed attorney in your jurisdiction.