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Illinois law limits "debtors prison"

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Fewer Illinois residents may land in “debtors prison” under a new law signed this week by Gov. Pat Quinn.

The law places new restrictions on when people can be locked up for failing to appear in court when sued over a bad debt.

The law passed after a publicity campaign pushed by the Quinn Administration and state Attorney General Lisa Madigan over the past year.

It followed complaints that courts, mainly in Southern Illinois, were routinely jailing debtors at the request of creditors' attorneys. When the debtors were bailed out, the bond was turned over to their creditors even if someone else had paid it.

The practice also occurs in some courts in St. Louis city and county. Legal Services of Eastern Missouri said a search of St. Louis County cases filed by three payday loan companies found 23 arrest warrants issued for debtors this year and last, leading to seven arrests.

Critics say the practice is a return of “debtors prison,” but creditors attorneys say it's necessary to make sure people obey the courts.

“It is outrageous to think in this day and age that creditors are manipulating the courts, even threatening jail time, to extract whatever they could from people who could least afford to pay,” said Madigan.

Jailings occur when debtors fail to appear for a hearing at which creditors attorneys ask them about assets that can be seized to pay their debts.

Until now, Illinois debtors could be notified of the hearings by regular mail. Some debtors complained that they never saw the notice, often because they had moved. Legal aid lawyers complain that creditors sometimes summons debtors to hearings month after month, and ask for an arrest warrant when a debtor finally misses one.

The new law requires that defendants be personally served with a summons. Debtors can't be repeatedly summoned unless the creditor has evidence that their circumstances have changed.

If the debtor doesn't appear, the judge must schedule a second hearing to determine why before issuing an arrest order. Bond can no longer be routinely turned over to creditors.

Steve Brubaker of the Illinois Small Lenders Association, said the bill was a compromise worked out between Madigan and representatives of collection companies and small-dollar lenders. He said his group succeeded in heading off stricter regulation of small loans.

“It is not our intention to jail people because they get behind on debt,” he said.


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