MADISON, Wis.–The Wisconsin Supreme Court has issued a ruling in a debt collection case that is being hailed by credit unions as a victory for lenders in this state, many of which have been targeted by attorneys claiming they were in violation of state law.
In the case, Security Finance v. Kirsch, defendant Brian Kirsch had argued plaintiff Security Finance Corp. of Wisconsin had violated the Wisconsin Consumer Act (WCA) in the process of attempting to collect on a debt. The case was originally filed by Security Finance in small claims court and sought $1,252.82 as payment on a consumer loan agreement.
During the appeals process Kirsch filed counterclaims stating he had not been properly notified in accordance with the WCA that he was being sued over a loan default. In addition, he further argued in part that the lender was in violation of laws requiring "a breakdown of all charges, interest, and payments" that must "identify separately the amount due on a date certain, the total of all charges occurring after this date certain, the total of all interest occurring after this date certain, and the total of all payments occurring after this date certain,” according to the court. Kirsch, who was seeking damages, had argued the lender had in addition to other violations also not acted in accordance with the "date certain" provision of the statute.
The court ruled against Kirsch.
Joint Brief Filed
The Wisconsin Credit Union League and CUNA had filed a joint amicus brief in the case.
“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,” said CUNA President/CEO Jim Nussle in a statement.
Credit unions in Wisconsin were among lenders in the state targeted by plaintiffs’ attorneys alleging violations of the WCA, CUNA noted.
“The court’s decision is now a binding precedent for other courts throughout the state,” CUNA said, noting that in the brief it and the WCUL had asserted that a debtor that has been sued on a consumer credit transaction without receiving proper notice does not entitle the debtor to sue the creditor for damages under a provision in the WCA.
“We’re 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, VP-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.”
The court’s final ruling stated that “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.”