Illinois “Debtors Prison” Bill in Senate Committee Hearing Next Week

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A state bill that would directly address the practice of “body attachment” for debt-related judgments will be the focus of an Illinois Senate committee hearing next week having already unanimously passed that state’s House of Representatives.

The bill, HB 5434, would require subpoenas to appear to be served directly to a debtor’s person or home, rather than being mailed. It would also require that any arrest warrants issued for failing to appear to expire after a year, and it would return most bond money to the debtor, rather than allow it to be used to pay off the debt. Bonds would also be restricted to no more than $1,000.

Most jurisdictions allow law enforcement officials to take into custody defendants in lawsuits should they fail to appear in court after directly being ordered to do so. Many consumer advocates argue that debt collection law practices do not go far enough in serving notice to debtor defendants, leading to default judgments and body attachment orders to bring in the defendants.

Heavily promoted by Illinois Attorney General Lisa Madigan, the bill passed the House of Representatives on a 107-0 vote in late March. The bill has been referred to the Senate’s Judiciary Committee for consideration. A hearing scheduled for Wednesday was cancelled and rescheduled for Tuesday, April 24.

Madigan’s very public airing of the “debtors prison” issue caused quite a stir in the ARM industry. Many in the practice of debt collection law noted that they were following civil procedures for courts in the state. The bill would specifically amend the Code for Civil Procedure.

Since introduction of the bill and its subsequent easy passage in the House, the proposal has picked up at least a dozen co-sponsors.

 

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Posted in Collection Law Firms, Collection Laws and Regulations, Debt Collection, Featured Post .

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  • avatar Lea Krivinskas Shepard says:

    My article, Creditors’ Contempt, provides helpful guidance about the controversy: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1928068.

  • avatar Linda Almonte says:

    Jessica Silver-Greenberg wrote a couple of articles on this last year in the WSJ. Here is one http://blogs.wsj.com/law/2011/03/17/on-the-rise-of-debtors-prison-the-scariest-thing-that-ever-happened-to-me/
    Companies going too far and performing actions like this is what will shut down the ARM industry. Not too long ago I was asked to go to some court houses in various states and look up judgments from multiple banks and debt buyers and research them for defects. The numbers even astonished me and that is hard to do. I would say to any debt buyer or attorney out there suing on these accounts have ALL of your back up before you even prepare the suit. And if you have a couple million worth of bought accounts that you don’t have the back up for either make the creditor provide the information or buy them back. If not if be smart scrap them and take the loss and start working on a better business model going forward. The technology and capability is there and we all know it. We spend the IT dollars where it provides value. As these pools of “defective” accounts are growing out there in our systems and in the courts so is the number of people impacted. And to many people’s surprise they aren’t “deadbeats” and pay their bills and got mixed up in this. Funny story of the week two of my own attorney’s got dialer calls from collection agencies for stuff they didn’t owe. Love to see if they get a default judgment that wouldn’t go over well. Anyone reading this could just as easily end up on the bad side of data gone wrong than any one deemed a “deadbeat” and even for the pros it can be expensive and a pain to remove. Now how would you feel if you got locked up for it or your spouse or child? Think about it the data I know doesn’t discriminate. How loud would you scream at the system and the industry? In fact most of you I know would be at the next conference taking care of it themselves but not everyone has that capability.

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