COLLECTING INTEREST IN WISCONSIN
By Attorney Randall J. Andersen
April, 2012
By Attorney Randall J. Andersen
April, 2012
Disclaimer: The information contained on this page is not legal advice. The information provided on this website is for general informational purposes and is not necessarily updated to account for changes in the law. You should consult with an attorney for legal advice regarding your individual circumstances.
We are frequently asked by clients whether they can collect interest on past due balances from their customers. The answer depends on a number of factors.
Is a contract rate specified? The best way to qualify to collect interest is to specify for the payment of interest in your contract. The contract should state the rate of interest and when interest starts to accrue. Including a clause in your contract requiring the payment of interest on past due balances is a good way to encourage prompt payment. Note that special rules for charging interest may apply if you are dealing with a “consumer” who is securing goods or services for personal, household or family purposes, under the Wisconsin Consumer Act. If you want to charge interest when dealing with consumers, it would be best to consult with an attorney to make sure that you do not run afoul of the Wisconsin Consumer Act.
What if the contract does not specify a rate of interest? If the contract does not specify a rate of interest, the creditor may still be entitled to collect interest on past due sums which are “liquidable,” meaning that the amount due is measurable or computable and there is not a genuine dispute about the amount due. The rate of interest on “liquidable” sums, when the parties do not otherwise specify a rate of interest in their contract, is 5% per year, pursuant to §138.04, Wisconsin Statutes.
Interest on judgments. If a lawsuit is brought to collect a delinquent balance, and the court issues judgment in favor of the plaintiff, the plaintiff is entitled to collect interest on the judgment at the “judgment rate.” For many years, the judgment rate in Wisconsin was 12% per year. However, the Wisconsin legislature adopted new legislation, which was signed into law by Governor Walker on November 16, 2011, reducing the judgment interest rate to the prime rate, as reported by the Federal Reserve Board, adjusted on January 1 and June 30 of each year. Under this rule, the current rate of interest on judgments in Wisconsin is 4.25% (3.25% prime rate plus 1%).
Is a contract rate specified? The best way to qualify to collect interest is to specify for the payment of interest in your contract. The contract should state the rate of interest and when interest starts to accrue. Including a clause in your contract requiring the payment of interest on past due balances is a good way to encourage prompt payment. Note that special rules for charging interest may apply if you are dealing with a “consumer” who is securing goods or services for personal, household or family purposes, under the Wisconsin Consumer Act. If you want to charge interest when dealing with consumers, it would be best to consult with an attorney to make sure that you do not run afoul of the Wisconsin Consumer Act.
What if the contract does not specify a rate of interest? If the contract does not specify a rate of interest, the creditor may still be entitled to collect interest on past due sums which are “liquidable,” meaning that the amount due is measurable or computable and there is not a genuine dispute about the amount due. The rate of interest on “liquidable” sums, when the parties do not otherwise specify a rate of interest in their contract, is 5% per year, pursuant to §138.04, Wisconsin Statutes.
Interest on judgments. If a lawsuit is brought to collect a delinquent balance, and the court issues judgment in favor of the plaintiff, the plaintiff is entitled to collect interest on the judgment at the “judgment rate.” For many years, the judgment rate in Wisconsin was 12% per year. However, the Wisconsin legislature adopted new legislation, which was signed into law by Governor Walker on November 16, 2011, reducing the judgment interest rate to the prime rate, as reported by the Federal Reserve Board, adjusted on January 1 and June 30 of each year. Under this rule, the current rate of interest on judgments in Wisconsin is 4.25% (3.25% prime rate plus 1%).