Debt Collection Laws in Illinois

Coverage and exclusions under Illinois law

Understanding what debt types are covered under Illinois and federal debt collection laws can help you determine your rights when dealing with a collector. In general, these laws apply to consumer debt, which is debt incurred for personal, family or household purposes. Debts tied to business or commercial activity are typically excluded from these protections.

Consumer debt covered by Illinois law

Most common household debts are protected under the Fair Debt Collection Practices Act (FDCPA) and Illinois state laws, including the Illinois Collection Agency Act and the Illinois Consumer Fraud and Deceptive Business Practices Act.

Covered debt types generally include:

• Credit card debt: One of the most common forms of consumer debt and fully protected under federal and state laws
• Medical debt: Covered and subject to rules around billing, collections and credit reporting
• Auto loans: Covered for collection activity, though repossession follows separate legal rules
• Mortgages: Covered for collection communications, but foreclosure is governed by additional laws
• Personal loans: Includes installment loans and unsecured loans used for personal expenses
• Utility bills: Covered once accounts are sent to collections

Debts typically excluded from standard protections

Some obligations fall outside traditional debt collection protections or are governed by separate legal frameworks:

• Business or commercial debt: Not covered if the debt was incurred for business purposes
• Taxes: Federal, state and local tax debts are collected under separate laws
• Child support and alimony: Enforced through family courts with different collection rules
• Court-ordered fines and restitution: Subject to government enforcement, not standard collection laws

Student loan considerations

Student loans can fall into both categories depending on the type. Private student loans are generally treated as consumer debt and are covered by the FDCPA when handled by third-party collectors. Federal student loans, however, may be collected by government agencies or contractors and are subject to different rules, including administrative wage garnishment.

Federal debt collection laws

The Fair Debt Collection Practices Act (FDCPA) is a federal law that affords all Americans certain rights when their unpaid debts have made them subject to collection activities.

For example, the FDCPA prohibits debt collectors from using deceptive or abusive debt collection practices, such as contacting you at odd hours, calling you repeatedly or making false threats regarding legal actions they plan to take. Debt collectors are also barred from revealing the existence of unpaid debts to other parties, both on social media and through direct forms of communication.

According to the Consumer Financial Protection Bureau (CFPB), if you have legal representation, the FDCPA also requires debt collectors to contact your attorney instead of reaching out to you personally.

The FDCPA also makes it possible for you to halt all communications from bill collectors by informing them in writing that you do not want to be contacted anymore. If the debt collector continues its communications, you can sue them under the FDCPA and get your legal fees paid, plus damages.

» MORE: How to handle bill collectors

Illinois debt collection laws

The state of Illinois also has its own laws that regulate the industry and protect residents from abusive debt collection practices. Here’s an overview of some specific state laws that apply.

Debt collection practices

Two state laws provide protections for consumers in addition to the protections afforded by the FDCPA: the Illinois Collection Agency Act (ICAA) and the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFDPA).

Illinois Collection Agency Act

The ICAA applies to businesses in the state attempting to collect on a debt, such as debt collection agencies or "debt buyers," but not to original creditors and other related businesses. This law requires that debt collectors become licensed in the state. A penalty of up to $10,000 can apply for those who try to collect debts without proper licensing.

This law also prohibits debt collectors from doing any of the following:

• Using profane, obscene or abusive language
• Trying to trick you into paying a debt
• Using force or threatening to use force to collect a debt
• Threatening arrest or criminal prosecution
• Threatening seizure of assets or sale in order to trick you into taking a specific action
• Threatening to disclose (or disclosing) information about your debts in order to hurt your reputation
• Threatening to disclose (or disclosing) information about your debts when it is known you dispute the debt
• Communicating about unpaid debts in a way that is considered harassment, such as calling over and over again
• Calling you about your debts before 8 a.m. or after 9 p.m. without permission
• Engaging in conduct that causes you mental stress or physical illness
• Pretending to use the legal or judicial system to collect on a debt
• Using a badge or official uniform to pretend to be part of a government agency
• Using a business name that implies affiliation with a government agency
• Providing false information about the amount of money owed
• Misrepresenting additional fees that can be added to unpaid debts when those fees cannot be legally added
• Representing themselves as an attorney if they are not

Illinois Consumer Fraud and Deceptive Business Practices Act

The ICFDPA makes it illegal for businesses (including debt collection agencies) to engage in deceptive, fraudulent or unfair acts as part of their business model. Specific components of the ICFDPA that apply to debt collection activities include the following prohibited acts:

• Attempting to collect a debt from your spouse when the spouse was not a co-signer on the debt
• Contacting your employer in regard to a debt without prior notice or default
• Failing to include the legal name of a business and its address in communications about a debt
• Reporting harmful information about a co-signer of a debt to a consumer reporting agency or a collection agency without appropriate notices

Statute of limitations

In the state of Illinois, a statute of limitations applies for different types of debt. Once this timeline is up, based on the type of debt involved, creditors can no longer take legal action in order to collect on an unpaid debt.

This doesn't mean you no longer owe the money, nor does it mean the debt collector won't continue trying to collect on the debt. The statute of limitations for debt in Illinois is merely a timeline after which you can no longer be sued for unpaid amounts.

In Illinois, the statute of limitations for various debts include:

• Two years for bad check penalties
• Three years for bad checks
• Four years for the sale or lease of goods
• Five years for unwritten and open-ended agreements, including credit card debt
• 10 years for written contracts and promissory notes

Required notices to debtors

Like in all other states, Illinois debt collectors are legally required to send a written notice within five days after first contact that explains more information about the debt being collected. This notice must include the name of the original creditor owed and their address, the total amount of the unpaid debt and the total amount currently owed, including interest and fees. The notice must also include full contact information for the debt collection agency or debt buyer.

Just like the FDCPA, the ICAA also gives you the right to request that a debt collector prove the legitimacy of a debt to you upon request. Residents also have 30 days to dispute a debt they believe is not theirs, or is in the wrong amount, in writing. At that point, the debt collector must temporarily stop collection efforts until they can verify the debt and they mail you written verification and proof.

Licensing and registration

The ICAA requires debt collectors to be licensed with the Illinois Department of Financial and Professional Regulation.

Enforcement and penalties

If a debt collection agency attempts to collect on unpaid debts without a license, the penalty for each violation can be as high as $10,000.

In the case of nonlicensure, or if a consumer in Illinois feels their rights have been violated under state law, they can file a complaint with the Department of Financial and Professional Regulation.

It's also possible for consumers in Illinois and other states to sue bill collectors if they violate your federal rights under the FDCPA. In that case, you may be able to collect monetary damages for physical or emotional distress you endured, reimbursement for lost wages, statutory damages of $1,000 and coverage for attorney's fees and other legal expenses.

» MORE: How to get out of debt

FAQ

Bottom line

If you have unpaid debts in Illinois, certain rights protect you from harassment and deceptive debt collection practices. You even have the right to tell bill collectors to stop contacting you, although evoking this right will not erase the debt or make it go away.

That said, your best bet is likely dealing with your unpaid debts head-on. You may be able to negotiate a cash payment to debt collectors to make them go away, or, if you can pay off all the amounts you owe, you’ll end collection activity once and for all. If you need help sorting out your debts, it may be wise to speak with a nonprofit credit counselor.