Recent Law Benefits Consumers

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On July 25, 2012, Governor Pat Quinn signed a new bill into law which provides additional protections to consumers against post judgment proceedings by creditors. Illinois House Bill 5434 makes several changes to “citations to discover assets” – one of the primary tools utilized by creditors to collect judgment debts from debtors in Illinois. The bill was a response to increased scrutiny by the Illinois Attorney General’s Office of the use of “body attachments” by creditors in citation proceedings (see Lucette Lagnade, Hospitals Try Extreme Measures To Collect Their Overdue Debts, Wall Street Journal, October 30, 2003, available at http://webreprints.djreprints.com/858821310103.html#top).

First, the new law requires a citation to be served by personal service or “abode service” (service on an individual residing at the premises who is at least 13 years old) as provided by Supreme Court Rule 105 and requires the creditor to attach a newly created Income and Asset Form (or a substantially similar form) to the citation. ILCS 5/2-1402(b-1); ILCS 5/2-1402(b-5). Before the new law, a citation could be served via certified mail and did not need to include an Income and Asset Form.

Second, the new law prohibits a payment order from being entered under the citation unless the Income and Asset Form (the “Form”) was served on the debtor, the debtor has an opportunity to assert exemptions, and the payments are from nonexempt sources. ILCS 5/2-1402(c-5). Effectively, the only new requirement under Section 1402(c-5) is that no payment order may enter unless the Form was served on the debtor. The requirement that no payment order enter against exempt income or assets was and is, presumably, a requirement under Section 1402(c).

Third, no order of body attachment (e.g. order of incarceration) may be issued against a debtor unless the debtor has first had an opportunity to answer after personal service or abode service of a Motion for Rule to Show Cause (“Rule”). ILCS 5/12-107.5. Previously, the procedure for issuance of body attachments varied from county to county with some counties issuing a body attachment immediately upon failure of the debtor to appear at the citation hearing and others issuing after service by regular mail of a Rule.

The new law provides additional protections for consumers in Illinois primarily by strengthening the notice requirements for citation proceedings.  Creditors, for their part, must now meet more stringent service requirements and be sure to include the statutory Form before they can obtain any payment order under a citation proceeding.

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