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Illinois Puts Families at Risk to Feed an Insatiable Debt Collection Machine

National Consumer Law Center’s 50-State Review: Illinois Receives a D Rating; Consumer Protections from Debt Collectors Need Major Reform

CHICAGO –Families across Illinois have still not recovered from the Great Recession of 2008, and the astronomic growth of the debt buyer industry makes them increasingly vulnerable to seizure of essential wages and property to pay their oldest debts. A new report from the National Consumer Law Center surveys the exemption laws of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands that protect wages, assets in a bank account, and property from seizure by creditors. No Fresh Start in 2019: How States Still Let Debt Collectors Push Families into Poverty finds that not one jurisdiction’s laws meet basic standards so that debtors can continue to work productively to support themselves and their families.

State grades are determined using five elements; protection of a living wage, the home, a car, a basic amount in a bank account, and household goods. Illinois received a D overall with an F for extremely weak protections of homes and household goods, and a C for protections of wages, automobiles, and bank accounts that have many gaps and weaknesses. Overall, Illinoisians fared better than their neighbors in Michigan, which failed every category, but Illinoisians worse than neighbors in Wisconsin, Iowa, and Minnesota, which offered stronger protections for wages and essential property. 

“This is a report card that I would be afraid to let my parents see,” said Brent Adams, Senior Vice President of Policy & Communication at Woodstock Institute, “We hope our dismal grade will inspire steps to better protect people who are struggling to get out of debt.”

“This report serves as a wake-up call for states to update their exempt property laws and stop putting millions of families at risk. Doing so will allow local courts to redirect their focus from the insatiable appetite of a debt machine that churns out millions of undocumented debt collection lawsuits each year,” said Carolyn Carter, National Consumer Law Center deputy director and author of the report.

Key Recommendations

The NCLC report recommends that state exemption laws should be reformed to:

●      Preserve the debtor’s ability to work, by protecting a working car, work tools and equipment, and money for commuting and other daily work expenses.

●      Protect the family’s housing, necessary household goods, and means of transportation.

●      Protect a living wage for working debtors that will meet basic needs and maintain a safe, decent standard of living within the community.

●      Protect a reasonable amount of money in a bank account so that debtors can pay commuting costs as well as upcoming rent and utility bills.

●      Protect retirees from destitution by restricting creditors’ ability to seize retirement funds.

●      Be automatically updated for inflation.

●      Close loopholes that enable some lenders to evade exemption laws. For example, states that allow payday lending enable these lenders to evade state laws that protect wages and exempt benefits from creditors. States that allow lenders to take household goods as collateral enable these lenders to avoid state household good exemptions.

By updating its exemption laws, Illinois can prevent over-aggressive debt collectors from reducing families to poverty. These protections also benefit the state by keeping workers in the workforce, helping families stay together, and reducing the demand on funds for unemployment compensation and social services.  


Woodstock Institute is a leading nonprofit research and policy organization in the areas of equitable lending and investments, wealth creation and preservation, and safe and affordable financial products and services. Woodstock Institute works locally and nationally to create a financial system in which lower-wealth persons and communities of color can safely borrow, save, and build wealth so that they can achieve economic security and community prosperity.

Since 1969, the nonprofit National Consumer Law Center® (NCLC®) has worked for consumer justice and economic security for low-income and other disadvantaged people in the U.S. through its expertise in policy analysis and advocacy, publications, litigation, expert witness services, and training.