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Illinois Debt Collection Laws

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In a Nutshell

The land of Lincoln and home of the Chicago-style deep-dish pizza, the Obamas, and…unsavory and unscrupulous debt collectors? Yes, unfortunately for residents of the Prairie State, Illinois also happens to have a lot of debt collectors that have flourished due to favorable state laws. A debt collection agency in Illinois can sometimes be as cold as a Chicago winter.

Written by Attorney Eric Hansen.  
Updated August 16, 2021


Ah yes, Illinois. The land of Lincoln and home of the Chicago-style deep-dish pizza, the Obamas, and…unsavory and unscrupulous debt collectors? Yes, unfortunately for residents of the Prairie State, Illinois also happens to have a lot of debt collectors that have flourished due to favorable state laws. A debt collection agency in Illinois can sometimes be as cold as a Chicago winter.

But they don’t always have to have the upper hand. In fact, by learning what Illinois debt collectors can and can’t do to collect a debt, you can navigate debt collections on your credit card debt and your medical bills from Illinois-based debt collectors.

What an Illinois Debt Collector May Do To Collect a Debt

Illinois debt collectors have many tools they can use to collect a debt. For one, they may sue you to collect a debt. When a debt collection agency sues you, you will receive a summons, which is a written notice of a lawsuit. Don’t ignore this or throw it away. You need to act and respond. The debt collector is taking legal action against you and you may need legal advice. If you have questions you should talk to the local court help desk or consider hiring a private attorney to help you with the court paperwork.

If the debt collection agency is successful in its lawsuit, it can receive a judgment in court to garnish your wages. Wage garnishment is when a debt collector takes a percentage of your income to repay the debt that you owe. But the amount they can take is limited by state law.

Illinois limits wage garnishment to15% of your income or your income minus 45 times the federal minimum wage, whichever is less. Illinois prohibits garnishing wages that come from child support, alimony or spousal support, unemployment benefits, veteran’s benefits, and federal benefits like Social Security. Your creditors cannot come after or garnish your spouse’s income.

Additionally, Illinois debt collection agencies can put a levy on your bank account to take a money judgment. This is particularly frustrating when you think you have money to pay for things but then you are surprised when your bank or credit union puts a levy freeze or hold on your account. Debt collectors also have the ability to put a lien on your house to sell the property and use the proceeds of the sale to satisfy the debt. This is a particularly effective method for bill collectors since real estate is so valuable and this has such a big impact on the borrower.

What an Illinois Debt Collector May Not Do When Collecting Debts

Thankfully, Illinois protects consumers from harmful and illegal collection activity by lenders, original creditors, debt buyers, and Illinois debt collection agencies. While debt collectors can sue you, they may not sue outside the statute of limitations. These time limits are established by Illinois law, as follows:

  • 10 years for written contracts, including mortgages. Keep in mind that the clock is restarted if a payment is made, even after the statute of limitations expires;

  • Five years for oral contracts;

  • Five years for credit card and installment payment contracts;

  • Judgments are valid for 20 years, but the creditor must revive the judgment if they haven’t taken any collection actions in the past seven years. Creditors can revive a judgment by petitioning the court and notifying the consumer debtor.

When collecting on a debt, debt collectors from the Prairie State can’t violate the federal Fair Debt Collection Practices Act (FDCPA). This is a federal law that helps regulate collection activity. Under the FDCPA, bill collectors are prohibited from using abusive or harassing language, lying to you about the amount you owe, and threatening to reveal or actually revealing your debt or its details to other people. There are many other ways that debt collectors can violate the FDCPA, but the act generally prohibits them from lying or being abusive. 

If you believe that an Illinois debt collection agency has violated the FDCPA you should contact the Federal Trade Commission (FTC), the Illinois Attorney General’s office, and the Illinois Department of Financial and Professional Regulation.

The Illinois Collection Agency Act (ICAA) is another consumer protection law that provides additional protections to state residents. A debt collector from Illinois is in violation of the ICAA if they operate without a state license, threaten to have someone arrested if they don’t pay their debt, or lie or exaggerate about the court process they have to go through to obtain a judgment or seize property to collect a debt. 

If you’ve been contacted by a collector, keep track of all collection calls, letters, and notices you receive. Be firm, use your knowledge, and don’t hesitate to report a debt collection agency to the appropriate authorities if you even think that they are doing something wrong or inappropriate. 

Protecting Your Rights in Illinois

You have rights under both state and federal law. If you don’t believe you owe the debt or think that the amount owed is incorrect, you can demand that the debt collector validate the debt. They can’t move forward with legal action against you until they validate the debt. Validation means they prove you owe the debt by providing evidence. 

You can request debt validation by sending a letter to the collection company. The CFPB has sample validation letters on its website. If you want collectors to stop contacting you, you can send a cease-and-desist letter, which is also available on the CFPB site along with other helpful resources you can use when a debt collector contacts you.

One of the best ways to protect your rights is by continually monitoring your credit score and credit report. You can and should dispute any inaccurate debts with the collection agency and with credit reporting agencies. 

You may be able to fight judgment lawsuits against you. It helps when you have a good defense, such as you were the victim of identity theft.

Finally, filing for bankruptcy and getting an automatic stay prevents creditors and debt collectors from contacting you about your unpaid debts. Bankruptcy can provide some quiet and clarity so that you can deal with your debts and get on with your life.

Knowing that you have rights under the FDCPA and the ICAA,  be strong in asserting them when dealing with debt collectors. If you need to bring out the heavy hitters, do it. Report unlawful debt collection information to the Illinois Attorney General’s Office, the FTC, and the Better Business Bureau.

Let’s Summarize...

A lot of debt collection agencies call Illinois home because of the state’s favorable laws and regulations. Even though they have powerful rights, so do you. You need to know them and be ready to use them. Don’t hesitate to dispute a debt, request validation, send a cease-and-desist letter, or report inappropriate behavior to state and federal agencies.

If you need help, you can hire a licensed, reputable private attorney. They may be able to stop the collection activity altogether, negotiate a reasonable debt settlement, or sue the bill collector for damages payable to you from the debt collection agency for their consumer protection violations. 



Written By:

Attorney Eric Hansen

Eric D. Hansen is an experienced Minnesota attorney within a number of varying and nuanced practice areas. He has operated his own solo practice as well as worked at small suburban boutique firms and large diversified downtown law firms. Eric has a wealth of experience in busines... read more about Attorney Eric Hansen

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