Business Debt Restructuring in Wisconsin: 7 Laws That Change Your Leverage (2026)

The Two Wisconsin Rules That Move Every Number on Your File

Wisconsin reads as a protective state on the first page and stops being one by about the fourth. The legislature abolished the confessed judgment more than fifty years ago, and Wis. Stat. §806.25 still carries the section title “No judgment without action,” which is about as plain a statement of policy as a code gets. What follows that section is thinner than owners expect. There is no commercial financing disclosure law here, no registration for the companies buying your receivables, no criminal usury line of the kind New York wrote, and a 12 percent contract ceiling that exempts corporations and limited liability companies by name. A restructuring in this state therefore gets built almost entirely out of the agreement, the payment record, and the timing of what you do next.

The second rule is the one nobody warns Wisconsin owners about, and it runs against you rather than for you. Wisconsin is a marital property state, a category otherwise occupied almost entirely by the community property states of the West. Income earned by either spouse during the marriage is marital property under §766.31(4). An obligation presumed to have been incurred in the interest of the marriage or the family is then collectible out of all of it under §766.55(2)(b). Your spouse’s decision not to sign the guaranty was a sensible decision, and it may not have accomplished what the two of you believed it accomplished. Chapter 812 is drafted to execute on precisely that, naming a judgment debtor’s spouse as a garnishment defendant where the judgment relates to a §766.55(2) obligation.

The seven sections below are ordered the way they tend to reach a business. First come the confession clause and the out of state judgment that routes around it, then the rate ceiling and the penalty statute that no longer stands behind it, then the disclosure duty that does not exist. After those come the transfer law Wisconsin renamed in 2024 and the garnishment and lien machinery that follows an entry of judgment. The last two are the deceptive practices claim your company can genuinely file, with the short clock attached to it, and the exemption schedule a personal guarantor is left standing on once a marital property state has finished with it.

1. The Confession Clause Is Void Here and the Judgment Still Arrives

A confession of judgment clause appoints somebody the creditor chooses to walk into a courthouse, admit your liability on your behalf, and take a judgment before you know a case exists. Wisconsin closed that door in the early 1970s. Wis. Stat. §806.25 provides that any authorization in a note executed after June 18, 1972, for the creditor, or other person acting on the creditor’s behalf, to confess judgment for the debtor is void and unenforceable. The legislature titled that section “No judgment without action,” which leaves very little room to guess at the intent. A Wisconsin confession clause in Wisconsin paper is worth nothing to the funder holding it.

Read the words rather than the headline, because the section reaches an authorization in a note, and a great deal of the paper this industry writes is not styled as a note at all. A merchant cash advance agreement describes itself as a purchase and sale of future receivables, the personal guaranty is usually a separate instrument, and the security agreement is a third. We could not locate a Wisconsin appellate decision applying §806.25 to a receivables purchase agreement, and anyone who tells you the question is settled is describing an argument rather than a holding. The position Wisconsin counsel generally take is that the section states a public policy broad enough to reach the device wherever it is hidden, and that position still has to be made to a judge.

The funder’s answer to §806.25 is not to fight it but to go around it, which is why the choice of law and forum clauses in your agreement matter more in this state than they would in a cognovit state. A judgment entered in New York on an affidavit of confession is a sister state judgment. Wis. Stat. §806.24(2) lets the holder of an authenticated foreign judgment file a copy with the clerk of circuit court of any Wisconsin county, after which the statute treats it exactly as it treats a judgment of a Wisconsin circuit court. Under §806.24(3) the creditor files an affidavit giving your last known post office address and the clerk mails you notice, and under §806.24(3)(c) no execution or other process for enforcement may issue until 15 days after the date the judgment is filed.

Those 15 days are the whole window, and they burn fast, because the attack on a filed foreign judgment is not a second run at the merits. A Wisconsin court asked to refuse enforcement is generally being asked whether the rendering court had jurisdiction and whether the judgment is entitled to full faith and credit. That inquiry is narrow enough that it usually turns on the confession paperwork itself: who signed the warrant, whether that person had authority to bind the entity, whether the confessed amount matched what the agreement permitted, and whether the affidavit satisfied the rendering state’s own requirements. The docket, the affidavit of confession, the funding agreement and the guaranty belong in front of Wisconsin counsel on the day the clerk’s letter arrives, not the week after it.

2. Twelve Percent on Paper, With Nothing Standing Behind It

Wisconsin’s legal rate of interest, the one that applies when the parties wrote nothing down, is $5 upon $100 for one year under Wis. Stat. §138.04, which is 5 percent. The contract ceiling sits one section over. Section 138.05(1)(a) bars any person from contracting for, taking or receiving more than $12 upon $100 for one year computed upon the declining principal balance of the loan or forbearance. Section 138.05(1)(b) sets a $6 per $100 figure computed on the original principal amount for paper repayable in substantially equal weekly or monthly installments with the interest predetermined. Twelve percent is a low ceiling by the standards of the fifty states, and if it governed merchant cash advances the industry would not fund Wisconsin businesses at all.

It does not govern them, and the subsections that remove it are short enough to read in a minute. Section 138.05(5) states that the section shall not apply to loans to corporations or limited liability companies, which disposes of the overwhelming majority of funded businesses in this state before any other question gets asked. Section 138.05(7) removes any loan or forbearance in the amount of $150,000 or more made after May 26, 1978 unless it is secured by an encumbrance on a one to four family dwelling the borrower uses as a principal residence. Section 138.05(6) carves out transactions governed by the Wisconsin Consumer Act at chs. 421 to 427. What is left inside the ceiling is a sole proprietor or a general partnership borrowing under $150,000, which is a real category of Wisconsin business and a narrow one.

Then comes the part that almost never appears in a summary. The consequences of exceeding the ceiling live in §138.06. Subsection (1) keeps an over ceiling instrument valid as to principal above $2,000 while barring any recovery of interest on it, subsection (2) sets a fine of not less than $25 nor more than $500 or imprisonment up to 6 months, and subsection (3) lets a borrower recover what was overpaid. Subsection (8) then provides that this section does not apply to a loan or forbearance made on or after November 1, 1981. The only other penalty provision in the chapter, §138.057, reaches intentional violations of §§138.053, 138.055 and 138.056, which govern interest adjustment and variable rate residential lending rather than business credit. Ask counsel what actually remains before building a settlement position on rate, because the printed ceiling and the enforcement machinery behind it are not the same vintage.

One rate number in Wisconsin runs in your direction, and it is the one that applies after everything else has gone wrong. Wis. Stat. §815.05(8) directs every execution upon a judgment for the recovery of money to collect interest at an annual rate equal to 1 percent plus the prime rate reported by the Federal Reserve Board in statistical release H.15. The reading is taken from January 1 for judgments entered on or before June 30 and from July 1 for judgments entered after that, and §807.01(4) supplies the only stated exception. The subsection contains no exception for a contract default rate, which is the reverse of the position in states where a 36 percent default provision climbs onto the judgment and compounds there for a decade. A funder holding a Wisconsin judgment is watching a balance grow far more slowly than its agreement contemplated, and that is a fact worth putting on the table when the two sides are pricing a payoff.

3. No Wisconsin Law Tells the Funder to Price the Deal for You

As of August 2026, Wisconsin has enacted no commercial financing disclosure statute and operates no registration or licensing regime for the companies that fund small business receivables or for the brokers who place their paper. Nothing in the statutes requires a funder to hand your company a page stating the amount financed, the amount you will actually receive once fees come out, the total repayment obligation, the finance charge, or an estimated annual percentage rate. The licensed lender statute at Wis. Stat. §138.09 does not fill the gap, because the business it licenses is defined around consumer lending rather than commercial credit. California, New York, Virginia and Texas all have a statute of this kind, and an adviser telling you that a missing disclosure voids your advance is quoting one of them without checking whether it travels to Wisconsin.

What the absence does is relocate the argument, from a regulator’s checklist to the transaction record itself. The questions that carry weight in a Wisconsin file start with whether the agreement performs like the sale it calls itself or like the loan it functions as. From there they run to what happened the first time revenue dropped and a reconciliation was requested, the filing order of every financing statement on the Wisconsin Department of Financial Institutions index, what a broker was paid and at what point relative to funding, and whether the money wired to your earlier positions matched the payoff letters those funders issued. Wisconsin numbers its version of U.C.C. article 9 as chapter 409, so the lien cleanup after a settlement runs through §409.513(3), which gives a secured party 20 days after an authenticated demand to send or file a termination statement.

The clause that most often decides the disclosure question is the one nobody reads at signing. A Wisconsin business gets funded on paper reciting New York or Delaware law with unremarkable regularity. A recital pointing at New York can pull New York Financial Services Law article 8 and 23 NYCRR part 600 into a dispute about a deal closed in Green Bay, along with the criminal usury line at N.Y. Penal Law §190.40 that Wisconsin never wrote. Whether a Wisconsin court honors that recital on any particular issue is a question for counsel rather than a foregone conclusion, and the answer is not uniform across issues: chapter 242 now carries its own governing law rule at §242.094 that overrides the parties’ selection entirely. Owners who want local counsel on the point can start with our page on Wisconsin business debt settlement lawyers.

4. Chapter 242 Changed Its Name in 2024 and Most Memos Missed It

Wisconsin used to run transfer attacks through the Uniform Fraudulent Transfer Act. It does not anymore. 2023 Wisconsin Act 246, published March 28, 2024, rewrote chapter 242, and §242.13 now provides that the chapter may be cited as the Uniform Voidable Transactions Law. The vocabulary moved with the title, so a transfer is voidable rather than fraudulent, and §242.04(3) says in terms that a creditor making a claim for relief under §242.04(1) carries the burden of proving the elements by a preponderance of the evidence. A memo prepared for a Wisconsin workout that still calls chapter 242 the fraudulent transfer act was either written before spring 2024 or copied out of a state that has not moved yet.

The two tests sit in §242.04(1). Paragraph (a) reaches a transfer made or an obligation incurred with actual intent to hinder, delay or defraud any creditor. Section 242.04(2) hands a court eleven factors to weigh on that intent, closing with one that describes an entire genre of failed workout: whether the debtor transferred the essential assets of the business to a lienor who then transferred the assets to an insider of the debtor. Paragraph (b) requires no intent at all and reaches a transfer made without receiving reasonably equivalent value where the debtor was left with unreasonably small assets for the business, or incurred debts beyond its ability to pay as they came due. Section 242.05(1) supplies the version for a creditor whose claim already existed, and §242.05(2) reaches a transfer to an insider on an antecedent debt while the debtor was insolvent and the insider had reasonable cause to believe it.

The deadlines live in two places, which is how they get misquoted. Section 242.09 says only that actions under the chapter are barred as provided in §893.425. That section then sets three separate clocks. An actual intent claim under §242.04(1)(a) gets four years after the transfer or obligation, or one year after it was or could reasonably have been discovered if that is later; §242.04(1)(b) and §242.05(1) get a flat four years with no discovery extension; and the insider antecedent debt claim under §242.05(2) gets one year after the transfer. Repaying yourself on an old member loan while the advances go unpaid is the §242.05(2) fact pattern precisely, and it carries the shortest window anywhere in the chapter.

Two features of the 2024 rewrite belong in the conversation before anybody drafts a plan. Section 242.094(2) provides that a claim for relief of this kind is governed by the local law of the jurisdiction in which the debtor is located when the transfer is made. Section 242.094(1) locates an organization at its single place of business or, where it has more than one, at its chief executive office. A company headquartered in Wisconsin therefore carries Wisconsin’s voidable transaction law no matter what the funding agreement recites. The remedies at §242.07(1) begin with avoidance of the transfer to the extent necessary to satisfy the claim. They run on through attachment or another provisional remedy available under chs. 810 to 813, an injunction against further disposition, appointment of a receiver over the transferred asset, and any other relief the circumstances require. What all of that argues for is a workout in which every asset movement is scheduled, priced and documented in advance by counsel, because the alternative is explaining it to a receiver two years later.

5. How Fast Chapter 812 Reaches a Wisconsin Operating Account

Wisconsin splits garnishment across two subchapters, and the split decides how much warning you get. Subchapter I of chapter 812 governs garnishment of property other than earnings, and §812.01(1) lets any creditor proceed against any person who is indebted to, or who has property in his or her possession or under his or her control belonging to, that creditor’s debtor. Your operating account, your processor’s reserve and every invoice your customers have not yet paid all sit on that track. Section 812.02(1)(b) opens it after judgment as soon as an execution upon an in personam judgment is issuable, and §812.02(1)(a) opens it before judgment in a contract action where a writ of attachment could issue.

What a Wisconsin garnishment captures is a moment rather than a stream, and understanding that difference is worth more than any other single fact in this section. Section 812.18(1) makes the garnishee liable, from the time of service, for the property then in its possession or under its control belonging to the debtor and for all its debts due or to become due to the debtor. Exemptions come off that figure, and the total is capped at the amount of the plaintiff’s claim. A bank served on a Tuesday morning answers for the Tuesday morning balance, and the garnishee has 20 days after service, exclusive of the day of service, to answer the garnishee summons. The follow on sits in §812.02(3), which lets the plaintiff proceed against other garnishees, or against the same garnishee again as it becomes liable. A creditor holding a judgment and a list of your depository relationships can run that sequence week after week.

The exemption that would rescue an individual does nothing whatsoever for your company. Section 815.18(3)(k) exempts depository accounts in the aggregate value of $5,000, but only to the extent that the account is for the debtor’s personal use and is not used as a business account. Section 815.18(2)(c) then defines “debtor” as an individual, expressly excluding an association, a corporation, a partnership, a cooperative and a political body. Your LLC holds no chapter 815 exemptions at all. The earnings track runs on different arithmetic. Section 812.34(2)(a) exempts 80 percent of disposable earnings, and §812.34(2)(b) makes earnings totally exempt where household income is below the poverty line or the debtor receives need based public assistance. The creditor pays the garnishee a $15 fee under §812.33(1), and §812.35(5) reaches pay periods beginning within 13 weeks after service.

Behind the account sits the lien and its calendar. Under §806.15(1) a judgment properly entered in the judgment and lien docket showing the debtor’s place of residence is, for 10 years from the date of entry, a lien on all real property of the judgment debtor in the county where it was rendered, excepting homestead property exempt under §815.20. Section 806.13 then lets the creditor transcript it into other counties. Execution issues as of right for 5 years under §815.04(1)(a), after which §815.04(1)(b) requires leave of the court in its discretion on prior notice to you. Section 815.04(1)(c) shuts everything down at 20 years, matching the window §893.40 gives for bringing an action on a judgment. A Wisconsin judgment is a decade of quiet pressure on any real estate you own and a two decade collection right, which is why a settlement negotiated before entry is a fundamentally different transaction from one negotiated after.

6. Your Company Can Actually File the Section 100.18 Claim

Most state deceptive practices statutes stop at the word consumer, and for a business plaintiff that stopping point is usually the entire story. Wisconsin drafted differently. Wis. Stat. §100.18(1) prohibits any person, firm, corporation or association from making an advertisement, announcement, statement or representation of any kind to the public, with intent to sell or in any wise dispose of real estate, merchandise, securities, employment, service, or anything offered to the public. What the section bars is a representation containing an assertion or statement of fact which is untrue, deceptive or misleading. Nothing in that operative language confines it to household purchases. Section 100.18(11)(b)2 provides that any person suffering pecuniary loss because of a violation may sue in any court of competent jurisdiction and shall recover that loss together with costs, including reasonable attorney fees.

The courts have confirmed what the text suggests. In K&S Tool & Die Corp. v. Perfection Machinery Sales, Inc., 2007 WI 70, the Wisconsin Supreme Court let a corporate buyer of a 1,000 ton industrial press take a §100.18 claim to a jury. Whether the corporation was a member of “the public” presented a question of fact rather than something the seller won as a matter of law. Kailin v. Armstrong, 2002 WI App 70, holds that a statement made to one person may constitute a statement made to the public, which is how a claim survives the fact that a broker pitched only you. Tietsworth v. Harley-Davidson, Inc., 2004 WI 32, states the three elements: a representation to the public made with the specified intent, an assertion of fact that is untrue, deceptive or misleading, and pecuniary loss sustained as a result. A funded business alleging that a broker misdescribed the payback, the term or the existence of a reconciliation right is pleading inside those elements rather than outside them.

Two limits are real, and they are where these claims die. The first is the particular relationship doctrine running through K&S Tool & Die and Kailin: once a relationship has formed between the parties, the plaintiff stops being a member of the public. Representations made during a renewal negotiation or in the middle of a reconciliation dispute therefore stand on far weaker ground than the pitch that got you to sign the first time. The second is the calendar. Section 100.18(11)(b)3 bars an action commenced more than 3 years after the occurrence of the unlawful act or practice. Kain v. Bluemound East Industrial Park, Inc., 2001 WI App 230, treats that provision as a statute of repose rather than an ordinary limitations period, so it runs from the misrepresentation and not from the day you worked out what had happened.

That repose date does more damage in this market than any other rule on the page, because an owner typically discovers the pricing problem in the third or fourth year of a stack that began with a broker call. The fee provision, by contrast, points your way. Section 100.18(11)(b)2 shifts costs and reasonable attorney fees to the person who suffered the loss, and it carries no mirror image clause exposing a losing plaintiff to the funder’s fees. That is a materially better risk profile than the two way fee shifting several other states attach to their business trade practices acts. Where the conduct is a course of dealing rather than a representation, the other candidate is §100.20. A private claim under §100.20(5) requires a violation of an order issued by the Department of Agriculture, Trade and Consumer Protection, so it needs a rule to hang on and not merely a bad sales call.

7. What a Guarantor Keeps, and What a Spouse’s Signature Never Controlled

Once the personal guaranty becomes a judgment against you individually, chapter 815 is the list of what a creditor cannot take, and the figures are modest. Wis. Stat. §815.20(1) exempts a homestead selected by a resident owner and occupied by that owner from execution, from the lien of every judgment, and from liability for the debts of the owner, to the amount of $75,000. That figure was set by 2009 Wisconsin Act 80 and has not moved since, and mortgages, laborers’, mechanics’ and purchase money liens and taxes are carved out of the protection. The same subsection extends the exemption to sale proceeds up to $75,000 for 2 years while they are held with the intention of buying another homestead. Section 815.18(3)(b)1 protects equipment, inventory, farm products and professional books used in your business to $15,000 in aggregate value, or, if you do not claim that one, §815.18(3)(b)2 protects an interest in a closely held business to the same $15,000.

The rest of the schedule is stated quickly. Consumer goods run to $12,000 in aggregate value under §815.18(3)(d), and motor vehicles to $4,000 under §815.18(3)(g), with any unused consumer goods amount stackable on top of the vehicle figure. Unmatured life insurance and annuities reach $150,000 under §815.18(3)(f), with contracts issued inside the prior 24 months limited to $4,000. Net income is protected at 75 percent of the debtor’s net income for a one week pay period under §815.18(3)(h), with a floor of 30 times the greater of the state or federal minimum wage. Two mechanical rules decide whether any of it helps you at all. Section 815.18(6)(a) provides that exempt property is not exempt unless affirmatively claimed as exempt, and that a debtor waives exemption rights by failing to follow the claiming procedure. The same paragraph makes a contractual waiver of exemption rights by any debtor before judgment on the claim void, which is what happens to the waiver buried in your guaranty.

Now the part that makes Wisconsin unlike every state east of the Rockies. Because this is a marital property state, §766.31(4) classifies income earned or accrued by a spouse during marriage as marital property and §766.31(3) gives each spouse a present undivided one half interest in each item of it. Section 766.55(1) presumes that an obligation incurred by a spouse during marriage was incurred in the interest of the marriage or the family. It adds that a statement separately signed by the incurring spouse at or before the time the obligation is incurred is conclusive evidence of that characterization. Section 766.55(2)(b) then provides that such an obligation may be satisfied from all marital property and all other property of the incurring spouse. Read together, the guaranty you signed alone, on the business that supports your household, is collectible against marital property that includes your spouse’s paycheck.

The enforcement statutes are built to carry that through. Section 812.01(1) lets a creditor proceed against a person holding property which is subject to satisfaction of an obligation described under §766.55(2), and it treats the judgment debtor’s spouse or former spouse as a garnishment defendant where the judgment relates to such an obligation. Section 812.02(2e) requires the creditor to name that spouse as a defendant before reaching the spouse’s property. Section 806.15(4) restricts the judgment lien on the same logic. The honest counterweight comes in three parts. The presumption in §766.55(1) is rebuttable, and §766.55(2)(d) confines other obligations to the incurring spouse’s non marital property and that spouse’s interest in marital property. The notice a creditor owes a nonapplicant spouse under §766.56(3)(b) reaches only credit governed by chs. 421 to 427, which means a business funder owes your spouse no notice at all. Whether a marital property agreement under §766.58 changes the analysis in your household is a question for Wisconsin counsel, and our page on fighting a personal guarantee on an MCA takes the guaranty apart in more detail.

Chapter 128 Receivership, the Wisconsin Option Nobody Mentions

Wisconsin keeps a state court insolvency chapter that most owners here have never heard named. Chapter 128, titled Creditors’ Actions, lets a circuit court appoint a receiver over an insolvent business, and it does several things owners assume only a federal filing can accomplish. Section 128.14(1) requires the court to set a claims bar three months from the filing of an assignment or the appointment of a receiver, and it permits the court to enjoin proceedings by any other creditor against the insolvent. Notice goes out by mail to each creditor at its last known address and by publication as a class 3 notice under ch. 985. Section 128.17 fixes the order of distribution and §128.08 governs the receiver or custodian.

The provision that matters most in a stacked advance file is §128.18. Subsection (6) voids all levies, judgments, attachments and other liens obtained through legal proceedings against a person who is insolvent at any time within 4 months before the filing of a petition or assignment, dissolving them and releasing the property to the receiver or assignee. Subsection (3)(b) reaches liens obtained inside that same 4 months that operate as a preference while the debtor was insolvent. Subsection (4) protects liens given or accepted in good faith for present consideration and properly recorded or filed, to the extent of that consideration, which is why a financing statement perfected at funding occupies a different category from a judgment lien docketed last month.

None of that makes chapter 128 the right answer, and it is not a substitute for federal relief in most files. Subchapter V of chapter 11 remains available to a business under the debt cap in 11 U.S.C. §101(51D), which stands at $3,424,000 for cases filed on or after April 1, 2025. It carries a discharge, a nationwide automatic stay and a plan process a state receivership does not replicate. A chapter 128 proceeding is a workout or liquidating device supervised by a Wisconsin circuit judge, it is generally cheaper and quieter than a federal case, and it belongs on the list of options a Wisconsin owner and Wisconsin counsel evaluate together rather than something discovered afterward.

The Order These Seven Run In When the File Is Real

A Wisconsin restructuring does not work through this list in the order it was written, because the deadlines are not evenly spaced. The shortest live clock is usually the three year repose period in §100.18(11)(b)3, which is why the broker’s emails and the recording of the funding call get pulled first even in a file where nobody expects to sue anyone. The next shortest is the one year window in §893.425(3) for an insider payment on an antecedent debt, which is why a member loan repaid last spring gets dated and valued before a plan is drafted. Everything else, including the four year voidable transfer clocks and the ten year judgment lien under §806.15(1), runs long enough to work with deliberately.

The second sequencing rule is that leverage in a state with no disclosure statute is documentary rather than regulatory. A funder’s recovery desk prices what it can collect and how long collection will take. In Wisconsin that calculation absorbs a §806.25 problem with any confession clause, a post judgment rate of prime plus one under §815.05(8) instead of the default rate in the agreement, the possibility of a chapter 128 proceeding that would dissolve a fresh judgment lien under §128.18(6), and the expense of proving a receivables purchase was a purchase when the reconciliation record reads otherwise. The file that moves a number is the one that makes each of those look worse to the desk: the agreements, twelve months of operating account statements, a current UCC search and the full reconciliation correspondence, assembled before the first call rather than after the third.

The third rule concerns your spouse, and Wisconsin owners get it wrong more often than anything else on this page. Because §766.55(2)(b) exposes marital property to an obligation incurred in the interest of the marriage or the family, the household budget you are trying to protect is already inside the creditor’s reach in a way it would not be in Illinois or Minnesota. That reality argues for resolving positions before entry of judgment rather than after. It argues just as strongly against the informal asset moves that occur to people at this stage, since chapter 242 was rewritten in 2024 with a preponderance burden at §242.04(3) and a governing law rule at §242.094 that keeps a Wisconsin company inside Wisconsin law wherever the transfer happens to land. Take advice before you change anything about how the debits are paid or where the money sits, because each of those is a legal act with consequences under your agreement.

Who Should You Call? Our Top-Rated Business Debt Firms

One firm on this list works the entire lifecycle of a business debt file, from stopping the daily debits through attorney-led negotiation, UCC lien removal, and a signed release. The other two cover broader debt categories that often sit alongside the advances. Choose accordingly.