Debt Collection Laws in Illinois – An Overview
In order to appreciate what the debt collection laws in Illinois do, you need to know what they are designed to prevent. They are designed to protect consumers from abusive and deceptive tactics from debt collectors. So while the purpose of these laws is to protect consumers, they are not there to help you if you owe a debt that you actually owe. If you don’t pay your bills, then you should be worried about someone coming after you to collect what you owe. But how people can do this, and how they can’t, is what these laws are all about.
For debt collectors, these laws tell you exactly what you can’t do when it comes to collecting a debt . It doesn’t mean that they can’t collect or that they shouldn’t, but make sure your tactics are legal. You can’t commit fraud or deceive someone, you can’t threaten people or harass them – in fact, you can’t call people before 8 a.m. or after 9 p.m. – and you can’t subject them to shockingly high interest rates like 72 percent. That’s not a complete list, but the law contains very specific rules on what you can’t do. If you follow these rules, then you should be fine.
So when you hear about debt collection companies breaking the law to collect, or read about an email scam, that’s what the Illinois debt collection laws are designed to prevent.
Key Statutes Under the Illinois Collection Agency Act
The Illinois Collection Agency Act imposes many regulations on collection agencies operating in the state. First, and perhaps most importantly, collection agencies must be licensed with the Illinois Department of Financial & Professional Regulation (DFPR) before they are legally allowed to conduct business in the state. This law applies to one of the most common ways that a collection agency contacts a debt actuator – by phone.
Section 210 ILCS 45 provides that "any corporation, association or other group, however formed, that engages in the business of soliciting claims for collection from debtors in the State of Illinois for a fee contingent upon the collection of any such claim must be licensed …." Thus, even if a debt collector never steps foot in Illinois, if he or she places calls to Illinois debtors, he or she MUST be licensed to do so – or face a fine up to $1,000 per violation.
So why does this matter to you? When a violation of the Illinois Collection Agency Act occurs, the consumer has the right to sue the creditor to recover up to $1,000 damages. Given that many people don’t only have $1,000 in debt, a $1,000 fine over a single collection call can be a significant deterrent to collectors calling you illegally.
Further, as a means of protecting consumers, the Act prohibits debtors from charging certain fees, and requires that they provide debtors with required disclosures. Section 210 ILCS 45 went into effect on July 13, 2011. Thus, any debt collector operating under this Act must have been licensed for more than two years at this point. Without a license, a collection calls should not occur – yet, you may be surprised as to how often that is not the case.
Consumer Rights When Debt Collectors Engage in Illegal and Unethical Conduct
Under Illinois debt collection laws, consumers are protected against a variety of unfair practices by creditors and debt collectors. The Illinois Fair Debt Collection Practices Act (IDFCPA) is designed to curb illegal practices by debt collectors and creditors. These protections are also provided under the Federal Fair Debt Collection Practices Act (FDCPA).
Creditors and debt collectors cannot call debtors at unreasonable hours or harass debtors at work about the debt. A creditor may not contact the debtor at all while the debtor is at work if the creditor is aware that doing so would violate the employer’s policies. A creditor or debt collector also may not contact the debtor’s neighbors, employer, or colleagues about the debt.
A creditor may not communicate with the debtor if the debtor has given the creditor a notice to stop. Any communication by a creditor to embarrass or harass a debtor, such as repeatedly calling the debtor, following the debtor during the day, or using obscene or vulgar language, also violates the IDFCPA. Creditors may not threaten to have a debtor arrested or garnish his or her wages.
Creditors also cannot contact the debtor without written notice after the debtor disputes the debt in writing. However, a creditor may send a letter to a debtor to inform the debtor that the creditor intends to take action as permitted by law. A creditor may not file suit against a debtor in a court if the debtor does not reside in the debt collector’s district. Creditors and debt collectors are prohibited from contacting a debtor about a debt the creditor knows or has reason to know is time-barred by the statute of limitations. Creditors cannot continue to furnish false information regarding a debtor to the credit bureaus, nor can creditors attempt to collect amounts greater than what is owed or collect interest that is not permitted under the original contract. As with the FDCPA, debt collectors cannot use unfair or unconscionable means to collect or attempt to collect an obligation due.
If you believe that a creditor has violated the IDFCPA, you may have a claim for money damages.
Requirements for Illinois Debt Collectors
The Fair Debt Collection Practices Act (FDCPA) regulates the actions of third-party debt collectors. The Act was designed to curb abusive collection practices in order to protect consumers from aggressive and unfair tactics by individuals and companies attempting to collect debts. The FDCPA, among other things, prohibits the use of abusive, deceptive or harassing debt collection practices.
The FDCPA applies to businesses that regularly collect or attempt to collect debts owed to a company or individual, known as "debt collectors." Included in the definition are collection firms and attorneys collecting debts on behalf of the clients they represent.
When communicating with a consumer – which is broadly defined to include any individual – either directly or indirectly, a debt collector must:
*truthfully identify itself as a debt collector;
*within five days of the initial communication:
1• send written notice with the amount of debt and details;
2• explain the consumer’s right to request additional information; and
3• provide notice that the consumer may dispute the debt.
*cease collection efforts until it responds to the request for additional information or disputes;
*cease collection efforts when the debt has been paid;
*cease collection efforts when the debt is no longer owed by the consumer;
*give 30 days advance notice prior to placing a mortgage on a consumer’s property; and
*send all communications in writing.
The Illinois Attorney General’s Role in Debt Collection Actions
The state A.G. plays a large role in enforcement of debt collection laws. They will investigate complaints that come in from consumers on illegal collection attempts and will prosecute violations.
The Illinois Attorney General is responsible for enforcing the law against debt collectors and creditors who violate the Fair Debt Collection Practices Act (FDCPA), the Illinois Collection Agency Act, and Section 9 of the Collection Agency Enforcement Act, all of which are designed to protect consumers from abusive debt collection practices.
The Illinois Attorney General will investigate complaints submitted by consumers or other interested parties and will prosecute the violators of these specific laws. The Illinois Attorney General provides a web-form for consumer complaints for consumers to report violations.
An investigation by the attorney general may result in an enforcement action in the form of an injunctive action, a suit for recovery, or the issuance of an administrative citation. An injunctive action will request that the debt collector or creditor cease its practice, make restitution, pay a fine, and provide any reports required by the attorney general. A suit for recovery seeks to recover actual damages to the consumer for any loss resulting from a violation of the FDCPA, the Collection Agency Act, or Section 9 of the Collection Agency Enforcement Act. An administrative citation can be issued for any violation of the FDCPA or the Collection Agency Act. An administrative citation is a fine of $1,000 for any violation considered a business offense under the FDCPA. Additional fines can be imposed by the attorney general for repeated offenses in the amount of $5,000 for up to five violations and $10,000 for all repeated violations in excess of five.
Filing a Complaint for Violations of Debt Laws
If a consumer finds themselves on the receiving end of a harassment call or letter, or has any other type of issue, I can tell you from experience that the worst thing you can do is just sit back and hope that the problem will go away. This is where filing a complaint comes in.
Most complaints, regardless of if these are collection agency complaints with the Illinois Attorney General, complaint with the Illinois Department of Financial and Professional Regulation, a complaint with the Better Business Bureau or one with the Consumer Financial Protection Bureau, require some information about the debt. This means you should have the following: Here is a step by step process of filing a complaint: Complete all of your information on the webpage (for the Illinois Attorney General) or complaints sections of the other websites . You’ll have to explain the type of debt you have, try to provide as much information as possible. You will likely be required to sign the complaint so in the case of email or other filed complaints you’ll be required to give your permission to file the complaint to the agency that will be looking into your complaint. You provide them with all of the information you have. You may eventually be asked to provide any supporting evidence you may have to help your case. This could include a log of the times you’ve been contacted by the collector, the phone number used by the collector, recordings and/or a transcript of the conversation or any other relevant evidence. You’ll be provided by the appropriate agency an update on the status of your complaint. The process will vary based on the agency you’ve filed your complaint with.
Consumer Legal Rights and Remedies
The Fair Debt Collection Practice’s Act ("FDCPA") is the federal law that governs debt collection practice. Illinois has its own version of the FDCPA called the Illinois Collection Agency Act ("ICAA"). Under both statutes if any debt collector or creditor violates the laws and attempt to collect in an illegal manner, you have the right to be compensated.
For example, the FDCPA allows for what is called statutory damages. Statutory damages can be collected from a debt collector if the debt collector violated the FDCPA if no payment is made for the consumer practicably every time a violation occurs. Meaning the debt collector may be liable for up to $1,000.00 whether you incurred any damages or not. The ICAA allows similar damages for violations. Further, if you can demonstrate actual damages (emotional distress or property damage) you are entitled to be awarded actual damages plus up to two times the actual damages under both statutes.
Both statute make it illegal for debt collectors to make any false, deceptive or misleading statements in order to, collected debts. Accordingly, if a debt collector attempts to collect a debt they know is out of the statute of limitation they may be held liable for violating both the FDCPA and ICAA as outlined above. It will be important to note that you will have the burden to prove that the debt collector was aware that the statute of limitation had expired in order to be compensated for actual damages under both statutes.
Best Practices to Follow When Communicating with a Debt Collector
As with anything, proper preparation and establishing a plan is the best way to deal with debt collectors so that they leave you alone. Planning gives you control of the situation and you will know what to expect and how you will handle issues.
The first step is answering the phone and speaking to whoever is trying to collect a debt. This chorus of companies lie to people and a lot of people lie to them. Never give them your Social Security number, let them know your attorney is now handling the matter, or try to settle over the phone if you can pay them right then and there. The time to pay debt is at the end when they need to agree on a resolution, not while they think they can negotiate a higher amount than you can pay.
You should determine based on your income and your cost of living whether or not you have a case under the Fair Debt Collection Practices Act ("FDCPA") or if you are just someone who owes money.
If you know or think that you have been violated under the FDCPA, you should keep track of everything. Do you have an e-mail account? Set up an email for these jerks to send you messages so that you have a dopy of all the communications. Give this email address to the collection companies and only give out your cell phone number if forced because you don’t have a land line that they can call. Keep a dedicated pad of paper near your phone so that you can write down information on a daily basis which also has the date, day and time listed. This helps with memory because in thirty days you probably won’t remember that you got harassing phone calls on Tuesday at noon. Remember, don’t trust anyone. Include the first and last names, and company name and address of the person calling you. If they don’t appear to be collector and refuse to identify themselves, hang up and take no further action with them other than hang up and tell them to stop calling. Ask on all calls for written verification of the amount they claim you owe and the name of the original creditor. These rights belong to you and there is no limit to the amount of time companies have to send you this information. Mark it down on your notepad as well.
FDCPA statute of limitations is one year so don’t wait too long. You can sue in state or federal court, but you’ll have a better chance of getting a verdict in your favor in federal court. Attorneys’ fees get paid by the defendant and are awarded by the judge at the time of trial or need for judgment. If you can afford to hire a debt collections attorney now, it would be smart to do so as the attorney can help guide you as to whether you have a case and will know what evidence you need to gather in order to prevail. Even the best attorneys don’t expect to retry the case from scratch in trial as they did at the initial interview, but it helps to know what they need to prove and helps you get a feel of whether the attorney knows what they are doing.
Chicago debt collection lawyers typically charge up to one third of the net recovery. They typically take a 33% retainer which they do not recoup until they have filed suit and there is a good chance to recover more money. Many attorneys may make exceptions for low income borrowers. Given the one year statute of limitations you shouldn’t hire an attorney unless you have at least a $1,000 case. When hiring an attorney, ensure that they you have experience in consumer law and the FDCPA and are not a personal injury, real estate, business or criminal defense attorney. The weary consumer law attorney is often overworked as a lot of work comes through on any given day. If your attorney doesn’t return calls or e-mails within two days, get a new lawyer. It is a shame to waste time and money on an attorney whom you thought would do better.
In the end, do not give in to the bullies. They know far more than you do about this law and will use this knowledge to their advantage if you give them the chance. If you take the right approach, they will be left in the dust.
Updates Regarding Illinois Debt Laws Over the Last Several Years
In recent years, Illinois debt collection laws have undergone some notable changes that both creditors and debtors should be aware of. One of the most significant updates came with the Illinois Collection Agency Act (225 ILCS 425), which now includes an amendment that expands the scope of the act.
Previously, the act only applied to businesses and collections agencies that were either based in Illinois or were engaged in business in the state of Illinois. Today, however, the act applies broadly to all businesses carrying out debt collection activities in Illinois, regardless of whether the business is based in Illinois or elsewhere. Moreover, the act’s provisions govern not just collection agencies, but also individuals and even members of business organizations.
Another change in debt collection laws is related to wage deduction orders. Recent amendments to the Illinois Wage Deduction Procedure Act (735 ILCS 10/1 et seq.) will help debtors by offering them a chance to challenge their wages being garnished for a creditor’s outstanding judgment against them. The new amendments take effect on January 1, 2022.
The amendment to the Illinois Collection Agency Act has been met with controversy, as the increased scope of the act brings into its ambit any individual or business, regardless of the business’ physical location. Given the broad language of the act, there remains some uncertainty as to whether the act might apply to collection activities outside the state. However, the Illinois state legislature was undoubtedly concerned with providing borrowers more protection under the law. As the application and reach of the act becomes clearer, Illinois creditors and debtors alike should seek out legal counsel from an attorney who specializes in Illinois debt collection law to review their options moving forward.
The coming changes to the Illinois Wage Deduction Procedure Act will allow debtors to receive advance notice of garnishment of their wages for debt that they owe. The law will now require that courts provide a 5-day notice before they will issue a final wage deduction order. This allows a debtor time to raise any objections to the final order with the court before the court issues the order. This amendment to the Illinois Wage Deduction Procedure Act allows debtors a greater chance to protect their rights and financial livelihoods.
Conclusion
As we’ve detailed in this article, the debt collection industry in Illinois is heavily regulated. Understanding the various laws that govern debt collectors and creditors is essential whether you prepare defenses to debt lawsuits or if you are trying to collect on an unpaid debt.
So to recap the major points of our Illinois Debt Collection Laws from the perspective of a collector or creditor: Remember that in Illinois, a consumer can use an "Illinois 2 Count as a Defense" to a collection based on a deficiency on a deficiency on property that was sold at auction. Also, in Illinois, a debt collector must be a licensed collection agent to attempt to collect a debt (what I call a "seller of claims" under the Illinois Collection Agency Act).
For consumers being sued for debt, take note that in Illinois, the "Statute of Limitations" is five years and the burden of proof is on the plaintiff to prove up the claim . If the defendant denies any of the allegations, they are likely to walk out of court the day of trial with no judgment against them.
The "Consumer Credit Protection Act" (15 U.S.C. § 1601 et seq.) is known as the Federal Truth In Lending Act and it covers creditors and lenders intentionally hiding fees in the loan process. It’s a very good way to win the case for the consumer.
Debt collectors have to be licensed closely in the state of Illinois and often make mistakes and even break the law. Many of these debt collection cases can be won on an autodialer rule or a Telephone Consumer Protection Act claim. Consumers should contact an Illinois collection attorney immediately if they are being harassed.
Hopefully, this article has helped you better understand the Illinois laws regarding debt collection.