How Much Interest Can I Collect for a Past Due Debt in Wisconsin?
Full Question:
Answer:
The judgment interest rate in Wisconsin currently is set at twelve percent and the legal rate is five percent. Penalties are typically governed by contract law. Some contracts provide for liquidated damages in the event of a breach. Punitive damages are typically not awarded unless intentional wrongdoing is proven, such as fraud. Costs and fees in collecting sums due may be awarded, such as amounts for attorney fees and filing costs.
Please see the following WI statutes:
138.04 Legal rate.
The rate of interest upon the loan or forbearance of any money,
goods or things in action shall be $5 upon the $100 for one year and
according to that rate for a greater or less sum or for a longer or a
shorter time; but parties may contract for the payment and receipt of
a rate of interest not exceeding the rate allowed in ss. 138.041 to
138.056, 138.09 to 138.12, 218.0101 to 218.0163, or 422.201, in which
case such rate shall be clearly expressed in writing.
138.05 Maximum rate; prepayment, disclosure; corporations.
(1) Except as authorized by other statutes, no person shall,
directly or indirectly, contract for, take or receive in money, goods
or things in action, or in any other way, any greater sum or any
greater value, for the loan or forbearance of money, goods or things
in action, than:
(a) At the rate of $12 upon $100 for one year computed upon the
declining principal balance of the loan or forbearance;
(b) With respect to loans or forbearances repayable in substantially
equal weekly or monthly installments and the face amounts of which
include predetermined interest charges, at the rate of $6 upon $100
for one year computed upon that portion of the original principal
amount of any such loan or forbearance, not including interest
charges, for the time of such loan or forbearance, disregarding
part payments and the dates thereof; and
(c) With respect to loans or forbearances repayable in installments
other than of the type described in par. (b), the amount of interest
may be predetermined at the rate set forth in par. (a) at the time the
loan is made on the basis of the agreed rate of interest and the
principal balances agreed to be outstanding and stated in the note or
loan contract as an addition to the principal; provided that if any
agreed balance of principal or principal and interest combined or any
installment of principal or principal and interest combined is prepaid
in full by cash or renewal the unearned interest shall be refunded as
provided in sub. (2) (b). In the computation of interest upon any
bond, note, or other instrument or agreement, interest shall not be
compounded, nor shall the interest thereon be construed to bear
interest, unless an agreement to that effect is clearly expressed in
writing, and signed by the party to be charged therewith.
(2) Any loan for which the rate of interest charged exceeds $10 per
$100 for one year computed upon the declining principal balance may be
prepaid by the borrower at any time in whole or in part. Upon
prepayment of any such loan in full by cash, renewal or refinancing,
the borrower shall be entitled to a refund of unearned interest
charged which shall be determined as follows:
(a) On any such loan which is repayable in substantially equal,
successive installments at approximately equal intervals of time and
the face amount of which includes predetermined interest charges, the
amount of such refund shall be as great a proportion of the total
interest charged as the sum of the balances scheduled to be
outstanding during the full installment periods commencing with the
installment date nearest the date of prepayment bears to the sum of
the balances scheduled to be outstanding for all installment periods
of the loan.
(b) On any other such loan, the amount of such refund shall not be
less than the difference between the interest charged and interest, at
the rate contracted for, computed upon the unpaid principal balances
of the loan from time to time outstanding prior to prepayment in full.
(3) A contract to make loans or an evidence of indebtedness may
provide for a rate of interest or penalty payable upon the principal
amount of an extension of a loan or forbearance or upon any amount in
default under a loan or forbearance which shall not exceed the rate
allowed in sub. (1) (a).
(4) Any person making a loan for which interest is agreed to be paid
at a rate exceeding the rate of $10 upon $100 for one year computed
upon the declining principal of the loan shall, at or prior to making
such loan, deliver to the borrower a statement, which may be
incorporated in a copy of the evidence of indebtedness, setting forth
all of the terms of the transaction in clear and distinct language,
including:
(a) The rate of interest agreed upon in terms either of simple
interest computed on the declining principal balance or of the actual
interest cost in money, and
(b) A statement that the loan may be prepaid in full or in part and
that, if the loan is prepaid in full, the borrower may receive a
refund of interest charged.
(5) This section shall not apply to loans to corporations or limited
liability companies.
(6) This section does not apply to transactions governed by chs. 421
to 427 and 429 or to discounts described in s. 422.201 (8).
(7) This section does not apply to any loan or forbearance in the
amount of $150,000 or more made after May 26, 1978 unless secured by
an encumbrance on a one- to four-family dwelling which the borrower
uses as his or her principal place of residence. For the purposes of
this section, a loan is deemed a loan which is in the amount of
$150,000 or more if:
(a) The outstanding principal indebtedness under the loan initially
exceeds $150,000; or
(b) The parties to the loan agree that the principal indebtedness may
exceed $150,000 at some time during the term of the loan and, when the
agreement was made, the principal indebtedness was reasonably expected
to exceed $150,000 notwithstanding the fact that less than $150,000 in
the aggregate was initially or later advanced.
(8) (a) This section does not apply to any loan or forbearance which
is made on or after April 6, 1980 and prior to November 1, 1981, or to
any refinancing, renewal, extension, modification or prepayment on or
after April 6, 1980 and prior to November 1, 1981, of any loan or
forbearance, unless it is made by a federally chartered or
state-chartered savings and loan association, except this section does
apply to forbearances occurring primarily for personal, family or
household purposes for which the only charge is a penalty or late
charge for nonpayment when due.
(b) This section does not apply to loans made within 2 years after
November 1, 1981, if made pursuant to loan commitments made on or
after April 6, 1980 and prior to November 1, 1981, unless made by a
federally chartered or state-chartered savings and loan association.
(c) This section does not apply to any loan or forbearance which is
made on or after November 1, 1981, or to any refinancing, renewal,
extension, modification or prepayment on or after November 1, 1981, of
any loan or forbearance, except this section does apply to
forbearances occurring primarily for personal, family or household
purposes for which the only charge is a penalty or late charge for
nonpayment when due.
