Background
Desjurdin and Mildred Lacey filed a voluntary amortization of debts petition under Wis. Stat. § 128.21, a Wisconsin procedure allowing wage-earners to restructure debts over up to three years with court protection. The Dodge County circuit court issued an order enjoining creditors — including Credit Acceptance Company, owed $5,384.09 — from garnishing the Laceys’ wages or communicating with them for debt collection purposes. Despite the order, two garnishments totaling $117 were deducted from Desjurdin’s paychecks on October 7 and 21, 2022. Credit Acceptance also sent the Laceys a letter dated September 29, 2022, which stated in bold that it was “for informational purposes only and is not a demand for payment,” notified them that their automatic withdrawal agreement had been terminated due to what the letter (erroneously) described as a bankruptcy filing, and explained how to voluntarily reactivate those withdrawals if they wished.
The Laceys sued Credit Acceptance alleging: (1) illegal debt collection by threatening or harassing conduct under Wis. Stat. § 427.104(1)(h); (2) illegal debt collection by attempting to enforce a nonexistent right under Wis. Stat. § 427.104(1)(j); and (3) civil theft by embezzlement under Wis. Stat. §§ 895.446 and 943.20(1)(b). After an earlier appeal reversed a circuit court order compelling arbitration, Credit Acceptance moved for judgment on the pleadings on remand. The circuit court granted the motion and the Laceys appealed.
The Court’s Holding
The Court of Appeals affirmed judgment on the pleadings for Credit Acceptance on all three claims. On the § 427.104(1)(h) and (j) claims as to the letter, the court held as a matter of law that the letter was not an “attempt to collect an alleged debt” — the threshold requirement of both provisions — because it made no demand for payment, offered no threat for non-payment, and merely informed the Laceys that automatic withdrawals had been terminated while explaining how to voluntarily resume them. As to the garnishments, the court found the § 427.104(1)(h) argument forfeited because the Laceys failed to develop it in their opening brief. On the § 427.104(1)(j) garnishment claim, the court relied on persuasive federal authority — Whitehead v. Discover Bank, 221 F. Supp. 3d 1055 (E.D. Wis. 2016), and Braatz v. Check & Cash LLC, 610 B.R. 887 (Bankr. E.D. Wis. 2019) — holding that a creditor does not assert a nonexistent right by accepting garnished funds forwarded by a garnishee, and that the amortization court’s order stayed Credit Acceptance’s ability to collect without extinguishing the underlying debt.
On the civil theft claim, the court found the Laceys’ appellate argument undeveloped and fatally incomplete. The Laceys failed to address the elements of Wis. Stat. § 943.20(1)(b) — the embezzlement provision actually pleaded — including how Credit Acceptance’s receipt of the funds was “contrary to its authority,” how it possessed the funds “by virtue of office, business or employment, or as trustee or bailee,” or how it intended to convert the funds to its own use. The court also noted that key arguments, including the inference of possession from the garnishment remittance statute and a § 943.20(1)(a) theory, were raised for the first time in the reply brief and therefore forfeited.
Key Takeaways
- A creditor’s letter that explicitly disclaims being a demand for payment, terminates automatic withdrawals, and merely informs a debtor of voluntary options is not an “attempt to collect an alleged debt” under Wis. Stat. § 427.104(1), foreclosing both the harassment and nonexistent-right provisions of Wisconsin’s consumer debt collection statute.
- Under Whitehead and Braatz, a creditor who passively accepts funds remitted by a garnishee — even after a court order stays collection — does not violate § 427.104(1)(j); the debtor’s remedy for wrongful garnishment runs against the garnishee, not the creditor.
- A court order commencing voluntary amortization proceedings is analogous to an automatic bankruptcy stay: it suspends the creditor’s right to collect but does not extinguish the underlying debt, and accepting stayed payments does not constitute asserting a “nonexistent right.”
- Appellate arguments not developed in the opening brief, and new theories or inferences raised only in a reply brief, are forfeited under Wisconsin appellate procedure and will not be addressed by the court.
Why It Matters
This decision draws a clear line between informational creditor communications and unlawful debt collection under Wisconsin’s consumer protection statutes. Creditors facing debtors in amortization or bankruptcy proceedings can send notices explaining account status changes — such as terminating automatic payment arrangements — without triggering liability under § 427.104, so long as the notice makes no payment demand and carries no threat. The ruling gives creditors practical guidance on how to communicate with protected debtors while remaining compliant.
The case also reinforces that passive receipt of garnished funds does not expose creditors to liability for statutory debt collection violations or civil theft when the garnishment was initiated and executed by a third-party garnishee. Debtors harmed by wrongful garnishment under an amortization order must look to the garnishee — typically the employer — for relief under Wis. Stat. § 812.41(2), not to the creditor who ultimately receives the funds. For attorneys representing consumer debtors, the decision highlights the importance of carefully pleading and briefing each statutory element, as undeveloped arguments will not survive judgment on the pleadings.