MADISON – Today. Rep. Tip McGuire released legislation along with Rep. Ron Tusler, and Sens. Wimberger and Roys, to limit predatory lawsuit lending in the state. Consumer lawsuit lending is a form of financing to a plaintiff in a lawsuit with repayment coming from the plaintiff’s recovery, if there is any recovery.
However, too often consumer lawsuit lending results in a plaintiff paying very high interest rates, leaving a winning plaintiff with little financial recovery at the end of a successful suit. Due to these high interest rates, consumer lawsuit lending can be considered a form of predatory lending. LRB-2074 seeks to limit these predatory loans by regulating lenders, capping interest rates and fees, and enhancing consumer protections.
“Predatory lawsuit lending can unnecessarily prolong litigation, and leave plaintiffs in far worse position financially even when they win,” said Rep. McGuire, “ “I am thankful for the work of my legislative colleagues to come together in a bipartisan fashion to protect Wisconsinites from unscrupulous lawsuit lenders.”
LRB-2074 creates the following protections for consumer lawsuit loans:
- Caps the interest rate at no more than 18 percent per year.
- Allows the consumer to repay the loan at any time.
- Limits the term of the loan to no more than 3 years.
- Caps the fees a lender may charge.
- Requires the transaction to be in writing.
- Allows the consumer five days to rescind the transaction.
- Prohibits the lender from making any decisions regarding the legal dispute, leaving any decisions regarding the litigation with the consumer and the consumer’s attorney.