A Debt Collector Just Called You in Wisconsin — Now What?

How Long Do Collectors Have to Sue You?

This is usually the first thing people want to know, and it matters more than you might think. In Wisconsin, there's a legal time limit — called the statute of limitations — on how long a creditor can take you to court over an unpaid debt. Once that window closes, the debt is considered "time-barred," and you gain a powerful legal defense.

For most common debts in Wisconsin — credit cards, medical bills, auto loans, personal loans — that window is 6 years under Wis. Stat. § 893.43. The clock generally starts ticking from the date of your last payment or the date the account first went delinquent.

But here's where it gets nuanced. Different types of agreements can have different rules. For instance, a written contract might have a different timeline than an oral agreement in some states. In Wisconsin, the picture looks like this:

There's an important trap here that catches people off guard: making a payment on an old debt can restart the clock. If you've been contacted about a very old debt, do not make any payment — even a small one — until you know whether the statute of limitations has already expired. That partial payment intended as goodwill could give the collector another 6 years to sue you.

What Happens If a Collector Gets a Judgment Against You?

If a collector sues you and wins — or if you don't respond to the lawsuit and they get a default judgment — they gain several collection powers. The most common one is wage garnishment: the court orders your employer to withhold part of your paycheck and send it directly to the creditor.

In Wisconsin, wage garnishment is capped at 20% of your disposable earnings. That's actually better than the federal default of 25% — not a huge difference, but if you're living paycheck to paycheck, that 5% matters. Wisconsin is a community property state. The 20% garnishment cap is lower than the federal default of 25%.

Wisconsin limits garnishment to the lesser of 20% of disposable earnings or the amount exceeding 30 times the federal minimum wage.

Certain types of income are completely off-limits to garnishment, no matter what: Social Security, SSI, veterans' benefits, unemployment compensation, workers' comp, and public assistance. If your income comes primarily from these sources, a judgment may be functionally uncollectable.

Can They Take Your House? Your Car? Your Retirement?

This is the question that keeps people up at night. The short answer is: it depends on the type of asset and how much equity you have in it.Wisconsin law protects certain property from being seized, even when a creditor has a court judgment. These are called exemptions.

Homestead: Your primary residence is protected up to Up to $75,000 in equity (Wis. Stat. § 815.20). If you owe $150,000 on a home worth $200,000, your equity is $50,000 — well within the exemption. A creditor can't force you to sell it. But if your equity exceeds the limit, the math changes, and you may want to talk with an attorney about your exposure.

Motor Vehicle: Up to $4,000 (Wis. Stat. § 815.18(3)(g)).

Personal Property: Up to $12,000 aggregate (Wis. Stat. § 815.18(3)).

Retirement Accounts: 100% exempt (Wis. Stat. § 815.18(3)(j)). Your 401(k), IRA, and pension are fully shielded from judgment creditors. Do not withdraw retirement funds to pay a debt collector — once money leaves a protected retirement account, it loses that protection.

Tools of Trade: Up to $7,500 (Wis. Stat. § 815.18(3)(b)).

Keep in mind: these exemptions only protect against unsecured creditors. If your car is collateral for an auto loan or your home secures a mortgage, those lenders have different rights. We're talking about credit cards, medical bills, and similar debts where the creditor doesn't have a direct claim on specific property.

You Got Served Papers — Here's What to Do First

Getting served with a lawsuit is frightening, especially if you've never been through the legal system. But the single most important thing to know is this: you have 20 days to respond. If you do nothing, the court enters a default judgment — and at that point, the garnishment and asset seizure options we discussed above come into play.

Filing your answer in Wisconsin's small claims court costs $55 for claims under $10,000. Wisconsin offers e-filing through the state court system, so you don't have to physically go to the courthouse to file your response.

Before you do anything, send a debt validation letter. Under both federal law (the FDCPA) and the Wisconsin Consumer Act, you have the right to make the collector prove they have the right to collect this specific debt, that the amount is accurate, and that they can document the chain of ownership back to the original creditor. Many debts change hands multiple times, and it's surprisingly common for collectors to lack proper documentation.

If you're facing a lawsuit and the amount is significant, this is the point where talking to an attorney makes sense — not because you can't handle it yourself, but because a consumer rights attorney often works on contingency or for fees that the collector pays if you win. Wisconsin's consumer protection laws include fee-shifting provisions, meaning a violation by the collector could result in them paying your lawyer.

Protections Most Wisconsin Residents Don't Know About

Beyond the federal Fair Debt Collection Practices Act (FDCPA), which applies nationwide, Wisconsin has its own layer of consumer protections that many people — and many collectors — overlook.

Related Guides

• What Is the Statute of Limitations on Debt?
• Your Rights Under the FDCPA
• How to Write a Debt Validation Letter