Illinois Collection Laws

Bills.com > Manage Debt > Deal with Debt > Debt Relief Q&A > Illinois Collection Laws
READER QUESTION

I live in Illinois. What are my rights in debt collection?

Read full question
Bills.com Resident Expert
Feb 02, 2012
HIGHLIGHTS
  • Illinois allows wage garnishment and account levies.
  • The Illinois statute of limitations on credit card debt is five years.
  • Consult with an attorney to learn more about your rights and liabilities.
BILL'S ANSWER

A collection agent or law firm that owns a collection account is a creditor. A creditor has several legal means of collecting a debt. But before the creditor can start, the creditor must go to court to receive a judgment. See the Bills.com resource Served Summons and Complaint to learn more about this process.

The court may decide to grant a judgment to the creditor. A judgment is a declaration by a court that the creditor has the legal right to demand a wage garnishment, a levy on the debtor's bank accounts, and a lien on the debtor's property. A creditor that is granted a judgment is called a "judgment-creditor." Which of these tools the creditor will use depends on the circumstances. We discuss each of these remedies below.

Illinois Compiled Statutes are available online.

Wage Garnishment

The most common method used by judgment-creditors to enforce judgments is wage garnishment, in which a judgment creditor would contact the debtor's employer and require the employer to deduct a certain portion of the debtor's wages each pay period and send the money to the creditor. However, several states, including Pennsylvania, North Carolina, and South Carolina, do not allow wage garnishment for the enforcement of most judgments. In several other states, such as New Hampshire, wage garnishment is not the "preferred" method of judgment enforcement because, although possible, it is a tedious and time consuming process for creditors.

In most states, creditors are allowed to garnish between 10% and 25% of your wages, with the percentage allowed being determined by each state.

Illinois garnishment rules are complex, and are found in the Illinois Code of Civil Procedure, Article XII, Chapter 7: Garnishment and Part 8. Wage Deductions. The maximum wages, salary, commissions and bonuses subject to collection under a deduction order, for any work-week shall not exceed the lesser of (1) 15% of the gross amount paid for the week or (2) the amount by which disposable earnings exceed 45 times the federal minimum wage hourly wage or, under a wage deduction summons served on or after January 1, 2006, the minimum hourly wage prescribed by Sec. 4 of the Illinois Minimum Wage Law, whichever is greater, in effect at the time the amounts are payable (735 ILCS 5/12-803 and S. 1752, L. 2005). Spouse A's earnings are free from the interference of Spouse B's creditors (750 ILCS 65/7). Child support garnishment limits are higher. Support of a spouse or dependent children have priority over all others (735 ILCS 5/12-808(c) and S. 1752, L. 2005).

Garnishment of Social Security benefits or pensions for consumer debt is not allowed under federal law. Garnishment of Social Security and pensions may be allowed for child support. In Illinois, 401(K) or other retirement funds are exempt from garnishment (735 ILCS 5/12-704 and 5/12-804).

If you reside in another state, see Advice on Judgment Garnishment to learn more about wage garnishment.

Levy

A levy means that the creditor has the right to take whatever money in a debtor's account and apply the funds to the balance of the judgment. Again, the procedure for levying bank accounts, as well as what amount, if any, a debtor can claim as exempt from the levy, is governed by state law. Many states exempt certain amounts and certain types of funds from bank levies, so a debtor should review his or her state's laws to find if a bank account can be levied. In some states levy is called attachment or account garnishment. The names may vary but the concepts are the same.

In Illinois, a levy is called non-wage garnishment, and is allowed under 735 ILCS 5/12-701 et seq. Non-wage garnishment is allowed if the plaintiff possesses a legal instrument such as a notice commanding the financial institution of a claim against the account. Illinois 735 ILCS, 5/12-1001(b) exempts debtor's interest in $4,000 worth of personal property, including cash.

Lien

A lien is an encumbrance — a claim — on a property. For example, if the debtor owns a home, a creditor with a judgment has the right to place a lien on the home, meaning that if the debtor sells or refinance the home, the debtor will be required to pay the judgment out of the proceeds of the sale or refinance. If the amount of the judgment is more than the amount of equity in your home, then the lien may prevent the debtor from selling or refinancing until the debtor can pay off the judgment.

Under Illinois law, an outstanding judgment can become a lien on real estate in Illinois owned by the judgment debtor. A judgment lien gives the judgment-creditor the right, under certain circumstances, to have the property sold in order to satisfy the judgment (735 ILCS 5/12-101 et seq). The Illinois homestead exemption makes it difficult to sell the residence of the judgment debtor, however (735 ILCS 5/12-901 et seq).

Illinois Statutes of Limitations

Each state has is own statute of limitations on judgments. Under Illinois law, the statute of limitations is governed by Article XIII 735 ILCS 5/ Limitations on an open account (i.e., credit card) is five years, and written contracts have a ten-year statute of limitations.

Illinois Foreclosure

Illinois foreclosure laws are found in 735 ILCS 5/Art XV. Review Illinois laws to learn more about the rules surrounding foreclosure in this state, including deficiency balances. Illinois has no anti-deficiency rule. See also the Bills.com resource Mortgage Foreclosure Illinois to learn more about Illinois foreclosures.

Illinois Payday Loan Collection

See the Bills.com resource Illinois Payday Loan to learn how Illinois law protects Illinois payday loan borrowers.

Recommendation

Consult with a Illinois attorney experienced in civil litigation to get precise answers to your questions about liens, levies, and garnishment in Illinois.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

Comments (73)


Avatar
Adrienne H.
Paducah, KY  |  February 02, 2012
I was recently served papers on a credit card from years ago that I maxed out and have been unable to fully pay off. As far as a payment plan, what are the Illinois States laws that keep them from forcing me to try and pay past a specific percentage?
Avatar
Bills.com
February 03, 2012
I believe you ask about usury law. See Illinois 720 ILCS 5/17-59 for details.
Avatar
Mark A.
Chicago, IL  |  January 18, 2012
When i was 18 (9 years ago) i was evicted from an apartment after loosing my job. The amount that was unpaid was later entered as a judgment which appeared on my credit report. Im looking into making a large purchase soon and was just wondering if its worth paying this large debt or if once the judgement reaches its 10 year mark if it will just drop off my report...
Avatar
Bills.com
January 20, 2012
With the understanding that I know nothing about the judgment-creditor, the only circumstances I would consider entering into negotiations with the judgment-creditor is if he, she, or it is aggressive and eager to renew the judgment and if you were about to buy a house and needed a clean credit report. Otherwise, let sleeping dogs lie. If the judgment-creditor renews the judgment, then negotiate a pay for delete contract to remove the derogatory from your credit report.
Avatar
Jasmine M.
Lancaster, MO  |  December 10, 2011
we live in Missouri but owe a doctor in Illinois an they sent papers to take money out of my husbands pay check but never took any of it out they just keep taking us to court and now they said they can issue an arrest warrant for him I just don't understand this. He can be arrested for a bill when they messed up and didn't take it out of his check.
Avatar
Bills.com
December 10, 2011
A person may not be arrested for a delinquent debt. That practice, along with debtors' prisons, stopped in the US during the Civil War. However, a person may be jailed for failing to follow a court order.

A creditor or a collection agency, has the right to file a lawsuit against a delinquent debtor. If successful, it can ask the court for a judgment that it can use to take action against the judgment-debtor. These action can include garnishing wages, placing a levy on the judgment-debtor's accounts, and placing a lien on the debtor's property.

Here, the creditor's or collection agency's statements are illegal under the Fair Debt Collection Practices Act. The first course of action is to validate the debt. If you are dealing with a collection agency then read more on Bills.com page about being harassed by collectors.
Avatar
Jason D.
December 08, 2011
Does Illinois allow out-of-state garnishment of wages for a civil judgement of damages made in a different state (in this case, Wisconsin)? The plaintiff is incorporated in Wisconsin alone and has no offices in Illinois, though they do have customers based in Illinois. Thanks!!
Avatar
Bills.com
December 09, 2011
Speak to a lawyer about domesticating a judgment. See if the expense is worth it and also whether the lawyer feels your judgment-debtor's customers would be bound by an order to pay you. If he has repeat customers who issue him 1099s, I think your chances are greater than if his end-user customers are unique and pay him in cash or check.
Avatar
J.D. R.
Chicago, IL  |  October 25, 2011
Does an employee need to make a certain amount of money before his or her wages can be garnished in Illinois? In other words, does an employee have to pass a threshold amount before he or she is subject to the Illinois wage garnishment law? If so, what is the amount and where is the statute?
Avatar
Bills.com
October 25, 2011
See the Bills.com resource Illinois Wage Garnishment Rules for a link to the Illinois Legal Aid page that discusses Illinois Wage Assignments in depth.
Avatar
Chris C.
Marengo, IL  |  October 19, 2011
My wages started to be garnished about 4 weeks ago and from last week to this week they added over another $1,000. This is after i received a letter of exact amount to be garnished. Is that legal?
Avatar
Bills.com
October 19, 2011
Interest and fees can continue to grow, after the judgment is issued specifying the debt. Check with an attorney in your area to see if the additional amount you are being charged is consistent with the law. If you can't afford an attorney, see if you can get a free answer through a legal aid organization in your area.

Another option is to check with the court clerk for the court that issued the judgment.
Avatar
Jo P.
Arlington, TX  |  October 16, 2011
I need to serve a Writ of Garnishment on Allstate Life Insurance Company for a debtor's non-retirement Annuity. Their Headquarters are in Illinois, but I live in Texas. Must I file in Illinois, and if not,where? Thanks
Avatar
Bills.com
October 17, 2011
Insurance companies are litigation machines with legal departments the size of small armies. Do not attempt to file an action against an insurance company without legal representation. Consult with an Illinois lawyer who has civil litigation experience to get the help you need in filing your case properly in the right court.
Avatar
John W.
Elgin, IL  |  October 11, 2011
In Illinois, 401(K) or other retirement funds are exempt from garnishment (735 ILCS 5/12-704 and 5/12-804). Does this include disbursements from a 401(k) or a 457 plan. In other words, if I (judgement debtor) liquidate my 401(k) or 457 plan and deposit that money into my bank account, will said money be exempt from levy from judgement creditors? With the exception of the IRS of course.
Avatar
Bills.com
October 11, 2011
I can't give you legal advice, but will share my opinion.

Once the money is in your bank account, I believe it is subject to a bank levy. I see nothing in the statutes you listed that covers the money taken out from your retirement account and placed in your bank. Consult with an attorney in Illinois if you want an authoritative answer.
Thanks for your feedback!
 
  • Articles
  • Ask Bill
Thank you for subscribing!