The large community of small-business people that provides credit in their sales of goods and services has finally received the support it needs. That happened when Wisconsin Act 442 was enacted by the state Legislature late last session. Act 442 corrected some grievous harm done to mainly small businesses six years ago, at the behest of a special interest group representing the insurance industry, when the law was changed to extend the time to respond to a civil summons and complaint from 20 to 45 days.
Business creditors, their representatives and attorneys were appalled when, “out of the blue,” the state Legislature enacted that change into law. The law handcuffed the ability of the vast majority of businesses to take steps promptly and effectively to legally recover monies due them from otherwise dubious debtors.
It is difficult to overstate just how harmful extending this period of time was to the business that wanted to recover on a delinquent account receivable. For example, the business owner usually spends a long time attempting to collect a delinquent account amicably, holding legal action as a last resort. Legal action becomes necessary as the situation deteriorates – the creditor is in dire need of the monies owed, and/or the debtor is becoming less able or willing to pay.
Waiting 45 days to get an answer to an action for a judgment was a serious threat to the cash flow of any business. This is especially true when dealing with a debtor that is not voluntarily paying its bills.
After six arduous years of battle and three successive legislative sessions, small business creditors, creditor organizations and their attorneys were able to get the original law – which required defendants in collection matters to respond to a civil summons and complaint within the shorter 20-day period – reinstated.
We finally succeeded in getting Senate Bill 99 passed in the Wisconsin Legislature, the start of the road back to the 20-day rule.
With the vigorous and aggressive advocacy of our Wisconsin Credit Association, our member companies and the Independent Business Association of Wisconsin and its members, legislators were forced to listen to our serious pleas and needs.
The members of these organizations wrote letters of support to their legislators and canvassed legislators to support Senate Bill 99. The chief sponsors of Senate Bill 99 were Sen. Ted Kanavas (R-Brookfield) and former Rep. Curt Gielow (R-Mequon), who listened along with other sympathetic legislators, and turned the “wrong” of the 45-day law into a “right” by returning it to the 20-day period.
Under such dedicated leadership, Senate Bill 99 became Wisconsin Act 442, reversing the time period back to 20 days. The result is that now, creditors and small business people once again have a reasonable opportunity to share in the due process that the reduced time for answer provides.
Dan Schwartzer, executive director of the IBA, told us, “The original change – to 45 days to respond – six years ago was unfriendly to small businesses and out of line with other states. This action benefited only a few big companies at the expense of all others. Changing the law back to 20 days helps to protect the backbone of our Wisconsin economy – small businesses. Unless you work in the small-business world, you can’t understand how important this correction is to our members.”
David Chartier, an attorney with the Milwaukee law firm of Kohner, Mann & Kailas, S.C. (KMK) which handles collection matters for hundreds of Wisconsin businesses, said cutting the 45-day period back to 20 days was fair and proper. In federal court and in most other states, civil matters work on a 20-day answer timetable, and this period is considered to be very reasonable, in his opinion. No other state had the 45-day period to answer a creditor-debtor complaint, he said.
Again, I wish to thank Sen. Kanavas, our members, the members of the IBA and the attorneys at KMK for coming to the aid of small business creditors when support was past due and urgently needed.
The collaborative effort of all who were involved in restoring the 20 days is a testament to how constituents can work together to correct unintended errors or faulty legislation and help this great State of Wisconsin maintain laws that are fair and equitable for all, not just for special interest groups. A job well done by a motivated majority. Thank you to all.
Darryl Rowinski is the president and chief operating officer of the Wisconsin Credit Association.
