The Wisconsin Supreme Court has ruled in favor of financial institutions in the Badger State in a case that could set a precedent pertaining to lenders’ rights to collect debts without fear of being sued for damages.
Plaintiffs’ attorneys had filed lawsuits against credit unions and other lenders in Wisconsin, alleging violations of the Wisconsin Consumer Act. According to those attorneys, because the debtor in the case did not receive proper notice from the collecting credit union, the plaintiff was entitled to sue the creditor for damages, per the WCA.
The Credit Union National Association and the Wisconsin Credit Union League filed a joint amicus brief in the case of Security Finance v. Kirsch. The two trade groups said the issue was an important one for credit unions and other consumer lenders.
In the final ruling, the Wisconsin Supreme Court said, “the creditor’s failure to provide such notice does not constitute a sufficient basis for relief” and that the failure to provide notice “was merely a failure to comply with a procedural requirement … such failure did not disrupt [creditor] Security’s right to payment from [debtor] Kirsch.”
On Tuesday, the two trade groups hailed the ruling, which they noted is binding on courts throughout Wisconsin.
“Wisconsin credit unions attempting good-faith efforts to collect on legitimate debts faced frivolous lawsuits as a result, which is why CUNA and the Wisconsin Credit Union League needed to act,” Jim Nussle, CUNA’s president and chief executive, said in a statement. “We are glad the court agreed with us, and we thank the Wisconsin Credit Union League for their leadership on this matter on behalf of Wisconsin’s 128 credit unions.”
“We are happy with the court’s common-sense opinion. This debtor defaulted on a loan but then asked the courts to erase the debt and award him damages just because the lender forgot to send out a notice before suing him,” said Paul Guttormsson, vice president of legal and compliance at the WCUL. “The Wisconsin Supreme Court honored long-standing precedent in this state, and the plain language of the Wisconsin Consumer Act, and told him no.”
