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Illinois creditor and lender bankruptcy attorney

You might not be aware of it, but one of President Biden’s campaign promises was to make credit reporting fairer and more accurate so that everyone across the country, no matter their race or socioeconomic status, can have more equal and much better opportunities to access credit cards, loans, mortgages, and other financial offerings. As a representative from an auto lender, equipment lender, truck lender, credit union, bank, or other financial institution, you might want to learn more about the possibilities that the Biden Administration is open to with regards to credit reporting reform. Here are some new ideas that you might see over the next four years. Keep them in mind during your dealings with debt collection activities, including bankruptcies

3 Potential Changes to Credit Reporting That You Should Know About

While there are many reforms the Biden Administration might consider in the future for credit scoring and reporting, these are some of the more substantial changes currently under consideration:

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Illinois wage deduction attorney

When it comes to wage garnishment, if you are tasked with collecting debt on behalf of a bank, credit union, or finance company, seizing funds from a debtor’s paycheck through garnishment or wage deductions is often a last-resort strategy for you to use in recouping your organization’s funds. With that being said, if you are faced with the need to garnish a debtor’s paycheck or other earnings, you should know just what types of funds or income can be garnished in Illinois. 

What Can Be Garnished

In general, according to Title III of the Consumer Credit Protection Act (CCPA), a person’s earnings can be garnished to collect on debts. Per the CCPA, earnings is defined as:

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What Are a Creditor’s Rights When Collecting from Cosigners?A person looking to create a loan agreement may need a cosigner if the creditor is uncertain whether the borrower will be able to continue making payments until the loan is repaid. As a creditor, a cosigner may allow you to take a chance on a potential client by mitigating some of the risks. If the borrower defaults on their debt, you have another party that you can order to repay the loan. However, the cosigner will want to avoid paying you if they can get out of it. You must understand the rights of creditors and cosigners and the circumstances under which the cosigner is liable for the debt.

When Can You Collect from a Cosigner?

According to Illinois law, creditors are not allowed to take collection action against a cosigner until:

  • The primary debtor has defaulted on or is delinquent on the debt;
  • The creditor has notified the cosigner of this via first-class mail; and
  • The cosigner has had 15 days to repay the debt in full or make arrangements for repayment.

The cosigner may try to delay full repayment by asking for forbearance to catch up on payments or to refinance the loan for the primary debtor. You must assess whether it is worthwhile to delay the collection process or allow the debtor to modify the repayment plan. The debtor may lack the financial resources to continue the loan payments on their own, making collection from the cosigner inevitable.

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Illinois Considering Five Changes to Debt Collection LawsA group of Illinois State Representatives has introduced a package of bills that are meant to increase debtor protection against creditors. The bills are all stalled at the committee level, putting their future in doubt. However, that is unlikely to stop the legislators from continuing to push these bills or from creating similar bills in the future if the current bills die. The laws would reduce a creditor’s ability to collect on outstanding debts by shortening the window of opportunity to enforce a debt judgment, reducing interest rates on debts, and providing greater protections for debtor assets.

Proposed Changes

The legislators have presented five bills that would amend Illinois’ Code of Civil Procedure, including:

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