Disclaimer: This video is designed to be educational and informative, but it is not legal advice. Collection law is constantly evolving and subject to change. Each situation is unique, and each case should be addressed to fit the unique situation.
I’m sure you’ve read some of your loan documents, which are less than clear about your ability to collect attorney’s fees upon default. Likely, the documents allow collection of attorney’s fees, “if not prohibited by law”. That begs the question, when does the law prohibit you collecting your attorney’s fees?
That’s a good question. In Wisconsin, if the loan is a consumer credit transaction—and therefore governed by the Wisconsin Consumer Act—you are not allowed to seek payment for the creditor’s attorney’s fees by the debtor. As discussed in an earlier video, generally, the Wisconsin Consumer Act applies to loans made to consumers (meaning, non-businesses) for less than $25,000 and to be used for personal or family purposes. Thus, if you have a loan which fits within those parameters—and therefore regulated by the Wisconsin Consumer Act—you normally cannot seek payment of your attorney’s fees.
However, there are limited exceptions to this rule. One such exception is if the extension of credit was for the purpose of acquiring or refinancing real property. In that case, there are limitations on the amount of attorney’s fees that can be collected, but it’s not outright prohibited. Because of the complexity of these rules, you should consult an attorney about your specific situation before you attempt to collect attorney’s fees from a customer.