At the end of July, the Governor signed a bill into law that will protect Illinois residents who are dealing with debt collection agencies. The consumer protection bill does not stop debt collectors from doing their jobs, but it does offer those in debt a bit of relief. Here is what Illinois residents need to know about it.
Currently, debt collectors are allowed to charge Illinois residents an interest rate of 9% — about the highest in the country. Under the new law, which will take effect Jan. 1, 2020, the interest rate will drop to 5%, which is more in line with other states. It is believed that this will save those in debt thousands over the course of their repayment periods.
The law also addresses how long debt collectors are permitted to pursue borrowers for any debts owed. Currently, they have 26 years to attempt to collect on overdue accounts. Starting this coming January, they will only have 17 years to seek payment. While that is still a long time, it shaves off nearly a decade, which is significant.
What’s the catch? There are a couple. First, this law only applies to those with consumer debts of no more than $25,000. A few examples of qualifying consumer debts include:
- Credit card debt
- Medical bills
- Auto loans
Second, this law will not benefit anyone who is already being pursued by debt collection agencies for payment. It only helps those whose debts go to collection starting next year. What does this mean for people who need help now?
Illinois residents who will not benefit from this consumer protection law because they need financial assistance now do have options when it comes to dealing with debt collectors. Bankruptcy, for example, can end creditor harassment and offer immediate debt relief in the form of discharge or an affordable payment plan. Legal counsel may be able to provide other options as well after reviewing the finer details of one’s situation.