Repossession Laws in Wisconsin

If you’re like most Wisconsinites, you need a car to get to your job. That’s why it’s especially devastating to find your car missing. This can happen if you get behind on your car payments and your lender does a repossession. The lender is allowed to repossess the car because a car loan is a secured debt, and the car is what secures it.

Unlike most other states where car repossessions are a surprise, you should have plenty of notice if you’re covered by the Wisconsin Consumer Act (WCA). This Wisconsin repossession law applies to car loans that were originally $25,000 or less. If your original loan amount was more than $25,000, you're covered by Wisconsin's version of the Uniform Commerical Code (UCC). This article explains how repossessions work in Wisconsin.

How Many Payments Can I Miss Without Risking a Repossession in Wisconsin?

Before the lender can repossess your car, you have to default on your loan. Usually, default is explained in your loan agreement. The number of payments you can miss before risking repossession varies based on which Wisconsin law your loan is covered under. 

• If your loan is covered by the WCA, you aren’t in default until you’re more than 10 days late paying on more than one full monthly payment. This essentially means you  have to be one month plus 10 days behind making payments. Also, under the WCA, the lender must send you a right to cure notice before they reposses your car.

• If you're covered by the UCC, you can be in default as soon as you’re a single day late on your loan payment. It depends on your loan agreement. It's highly unusual for a lender to repossess when you're only a day late. Usually, it'll be at least a couple of months late before the lender will start a repossession.

Will I Be Notified Before the Repossession? How?

If you're covered by the WCA, the creditor must mail you a written notice before they can repossess. This notice of your right to cure the default can only be sent once you're in default. The lender must wait at least 15 days after sending you this right to cure notice before they can repossess. Curing the default means you catch up on your missed payments plus any applicable late fees. If you've received your right to cure notice twice on the same loan and cured it twice in the last 12 months, you don't have this right the third time within 12 months. In this case, the creditor can repossess without notice. 

You may not agree with the default notice. If that's the case, you must make a written demand that the lender brings a court proceeding to prove its claim that you defaulted. This written demand must be made within 15 days of the postmark on the right to cure letter. This will force the creditor into a judicial repossession instead of a self-help repossession. A judicial repossession is one that goes through the courts. A self-help repossession is one that doesn’t. But, if you lose in court, you'll be liable for the lender’s attorney fees and court costs. 

If your loan is covered by the UCC, the lender doesn’t have to notify you prior to repossessing your car. The only notices you’ll receive will be after the repossession.

How Can I Prevent a Repossession?

In Wisconsin, it's best to contact your lender if you know you're going to have difficulty making a payment. The lender may have options to help you get back on track. 

Under the WCA, you have a right to catch up on your loan within 15 days of receiving your notice of default. Your notice of default can't be sent until approximately 40 days after a missed payment. So, you really have 55 days to catch up before the lender can repossess your vehicle. With the UCC, you have no such rights. One of the best ways to avoid repossession might be to not take out a car loan that’s more than $25,000. This way you'll be protected by the WCA. 

What Can Repo Companies in Wisconsin Do?

In Wisconsin, a repo company can’t commit a breach of the peace. This means they can’t take your car from your garage or from a fenced-in yard. They can take the car from your driveway or a parking lot, though. You could come out of the grocery store and find your car is missing. If you keep your car locked in a garage to avoid repossession, the repo company can get a court order and be assisted by law enforcement. 

If you catch a repossession agent and object to the repossession, but they don’t stop, this is also a breach of the peace. That said, you can’t force them to stop. If you try to use force, you could get hurt and may even have criminal charges brought against you. Instead, record the breach of the peace with your phone. Then talk with a Wisconsin attorney to see if you have a case against the repo company.

What About the Personal Property in My Car?

You have a right to get anything you left in the car during the vehicle repossession. Contact the repossession company to make arrangements to get your things. It's a good idea to mail a written list of items that were in the car to the repo company immediately. This letter should demand the return of the items. If you know you're at risk of repossession, it's best to not leave things in your car.

If you have problems with the repo company, call the lender. They may both be liable for the things you had in your car. If you still can't get your stuff back, talk to a Wisconsin attorney about filing a claim against the repo company and the lender.

What Happens After a Repossession in Wisconsin?

If your loan is covered by the WCA, you'll have 15 days to redeem your motor vehicle before it can be sold. When you redeem your vehicle, you get it back.

If your loan is covered by the UCC, you'll get a notice of your right to redeem and what the lender intends to do with the vehicle. If it'll be sold at a public sale, you'll get notice of the date, time, and place of the sale. If it will be sold at a private sale, you'll get notice of the date after which the car will be available for sale.

The lender is required to sell your car in a commercially reasonable way. This includes doing the proper advertising for the auction or sale and trying to get a decent price for the car. This matters because the sale price determines if you have a surplus or a deficiency balance.  

Do I Still Owe After a Repossession in Wisconsin?

If the sale proceeds are less than your car loan balance plus the cost of the repossession, you'll have a deficiency balance. This is likely to be the case if you already owed more on the loan than the car was worth. For example, if the loan balance on your car is $20,000 and the repossession expenses were $1,000, you’ll owe $21,000 minus what it sells for. If the car only sells for $18,000, you'll have a $3,000 deficiency balance ($21,000 minus $18,000). 

You can decrease this deficiency balance by voluntarily surrendering the vehicle before it’s repossessed. In this case, had you voluntarily returned the vehicle, your deficiency balance would only be $2,000 since there wouldn’t be repossession expenses.

Lenders often sue borrowers who have deficiency balances. Once the lender has a court order called a deficiency judgment they can collect on that judgment through a wage garnishment or bank account levy.

Can I Get My Car Back After a Repossession in Wisconsin?

You can get your car back in Wisconsin after a repossession under both the WCA and the UCC. You do this by redeeming the collateral. But, the WCA and the UCC define "redeem" quite differently.

Under the WCA, you can redeem your car after repossession by doing all of the following within 15 days of the repossession:

• Catching up on the payments you're behind on the loan.

• Paying your late fees.

• Getting in compliance with any other parts of the loan agreement, (for example, proving you have insurance on the vehicle if you’d let it lapse).

• Paying any court costs.

• Paying any other expenses you're responsible for under your loan agreement such as attorney's fees and repossession costs.

• Making a security deposit of three months’ worth of payments on the loan or 1/3 of the remaining balance on the loan, whichever is less.

Under the UCC, to redeem you'll have to pay the full loan balance, not just catch up on the missed loan payments and other fees. You'll also have to pay any expenses allowed under your loan agreement such as the cost of repossession.

There's another way to get your car back in Wisconsin. You could file a Chapter 13 bankruptcy. In the past, Chapter 13s have been effective at getting back repossessed vehicles. This should work regardless of whether your loan is covered by the WCA or the UCC. Take advantage of a free consultation with a Wisconsin bankruptcy law office to make sure this will work for you. Of course, with all the notices you get under the WCA, you should know whether you need to file bankruptcy before the repossession occurs. A Chapter 13 bankruptcy can always be used to prevent an auto repossession before it happens.

Where Can I Find More Information About Repossession Laws in Wisconsin?

• Wisconsin Free Legal Answers

• Wisconsin Court System’s Self-Help Law Center

• The State Bar of Wisconsin’s Modest Means Program

• University of Wisconsin-Madison’s Consumer Law Clinic 

• Legal Action Wisconsin