The United States abolished debtor's prisons in the 1830s. Less-than-scrupulous
debt collectors are using a loophole in Illinois state law to bring them
back. The difference between the 1830s and the 2010s is that now, debtors
are being jailed for failing to respond to collection hearings or for
failing to pay fines assessed against them.
When a creditor obtains a money judgment against an Illinois debtor, it
will generally issue a "citation to discover assets." This procedural
maneuver requires the debtor to appear in court, be sworn in, and answer
questions about his or her assets. If the debtor does not appear, a "rule
to show cause" may be issued. This means that the debtor must provide
the court with a valid reason for missing the citation to discover assets
date. If the debtor does not appear in court on the rule to show cause,
then the judge may issue aa civil attachment order for contempt of court.
Reports of this practice have been making the rounds in the media lately.
Illinois Attorney General Lisa Madigan has gone on the record stating
that these "illegal abuses" of the law must stop. On March 29,
the Illinois House passed
HB 5434, the Debtor's Rights Act of 2012, which is designed to stop these
debt collection practices.
The changes would require notification of a citation to discover assets
to better disclose exemptions to debtors and also require that creditors
provide a worksheet to allow a debtor to prepare for a citation hearing.
Most importantly, the changes would prohibit the issuance of a body attachment
unless the debtor is served with the notice of the rule to show cause.
This service must be either personal or abode service and it must be made
by the sheriff or other permitted process servers. Personal service occurs
when a debtor is personally handed the notice of the rule to show cause.
Abode service occurs when a member of the debtor's family who resides
at the debtor's residence is served with the notice of the rule to
show cause. Effective abode service also requires that a copy of the notice
be mailed to the debtor as well.
If this bill is signed into law, it should go a long way towards stopping
this practice. The added service requirements mean that debtors receive
more specific, documentable notice of the proceedings. Those who fail
to heed that notice must still be given an opportunity to appear in court
before the body attachment can issue.
These added consumer protections are great, but one can never discount
the power of a well-planned bankruptcy in situations such as these. If
creditors already have judgments against you, it may be worthwhile to
consider filing a
Chapter 7 or
Chapter 13 bankruptcy. Until this bill passes the Senate and is signed into law,
the automatic stay and the discharge injunction remain powerful protections.
Even after this law passes, it simply provides another layer of protection
that is bolstered by the automatic stay and the discharge injunction.
Again, if you are already at this stage of collections, it is probably
high time to consider a