 House Bill 5434 would prevent creditors from abusing the court
system to put debtors in jail to collect on a debt they are clearly
unable to pay. Over the last year, Madigan has learned that
residents in roughly a third of Illinois' counties commonly face
incarceration when they fail to appear in court over a previously
entered judgment to pay a debt. In many of these cases, notices of
court hearings were mailed to addresses that were no longer valid,
leaving many debtors unaware of the hearings. In spite of the
failure to notify the debtors, courts have frequently issued
warrants for their arrests."Long ago, our society recognized that
it was immoral to send a poor person to debtor's prison. Yet this
practice has reappeared in Illinois through creditors' abuse of the
courts," Madigan said. "This legislation will ensure that people who
have the means will pay their debts, while also preventing poor
older and unemployed persons from being illegally and unfairly
incarcerated."
Compounding the problem, Madigan said, is that many victims of
these practices are living solely on income that is legally
protected from being used to pay outstanding debt judgments,
including Social Security, unemployment insurance or veterans'
benefits.
Madigan's legislation would also ban abusive and burdensome "pay
or appear" orders that are routinely entered against debtors in some
Illinois counties. These orders -- which usually remain in effect
for three years -- require debtors to make a monthly payment or
appear in court each month to explain why they are unable to pay,
even if their financial circumstances have not improved. Madigan
said a debtor who misses just one payment and court hearing can end
up in jail. Debtors who have been victim to this practice typically
owe outstanding medical bills, credit card debts or payday loans.
The legislation would amend the Code of Civil Procedure to codify
and clarify practices followed by attorneys, creditors and courts
across Illinois to ensure that courts make a finding of a consumer's
ability to pay before entering a payment order. The legislation also
would prohibit payment orders that rely on legally protected income
and would prevent arrest warrants from being issued unless the
debtor was personally served with a hearing notice.
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"The fact that impoverished debtors can still go to jail in several
Illinois counties casts a shadow on our entire state," said state
Rep. Ann Williams, the House sponsor of the bill. "As lawmakers, we
have a duty to protect the due process rights of Illinois residents
and to preserve the integrity of our legal system. This legislation
serves both of those vitally important purposes."
According to court documents obtained by Madigan's office, one
Illinois court entered a "pay or appear" order against a mentally
disabled man living on legally protected disability benefits that
provided him with $690 a month. Even though the man informed the
court of his circumstances, he was still ordered to either pay $100
a month or appear in court once a month for a three-year period.
"The attorney general's bill, which I am pleased to shepherd
through the Senate, balances the rights of creditors to collect a
just debt with fairness to those who may be forced into debt by
economic loss or medical tragedy," said Sen. William Haine, Senate
bill sponsor.
[Text from file received from the office
of
Illinois Attorney General Lisa
Madigan]
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