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Illinois commercial debt collection attorney

As someone from a credit union, bank, or other financial institution, among other organizations, who deal with debt collection activities every day, sooner or later, you will have to deal with Bitcoin and other cryptocurrencies, if you have not already and whether you want to or not. This is because, over the last several years, cryptocurrency has made tremendous strides in the following ways:

  • Multibillion-dollar investors from leading companies have been investing in cryptocurrencies like Bitcoin to get ahead of the trend, increasing its value and popularity amongst investors.

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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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Chicago debt collection attorney detinue

If you work for a bank, credit union, auto lender, truck lender, equipment lender, or other finance company, you are familiar with the way some debtors might refuse to pay their monthly payment for their debt secured by collateral. In those cases, repossession of the collateral is necessary, but sometimes the debtor will hide the car, boat, or other collateral to prevent repossession. If that is the case for you and your organization, consider the actions you can take to recover the property, including legal actions.

When Repossession Fails 

Repossession companies are legally permitted to do many things in their pursuit of reclaiming property for creditors, but one thing they cannot do is “breach the peace,” which means they cannot commit crimes like breaking into a property or intimidating creditors in order to retrieve the collateral. This is one of the reasons creditors should be very mindful and discerning when choosing a repossession partner. 

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What to Do If Your Debtor is Judgment ProofIn most cases, receiving a court judgment against a debtor gives a creditor a clear path towards debt collection. The judgment allows you to seize assets and garnish wages until you have collected what is owed to you. However, a court may still stop your collection efforts if it determines that the debtor is “judgment proof.” Also known as “collection proof,” a judgment-proof debtor is someone who lacks the minimum income or non-exempt assets to collect from. This person could be without a job or meaningful assets and surviving on public benefits. What can you do if a debtor is judgment proof?

Understanding What Judgment-Proof Means

Federal and state laws provide exemptions for debtors who are facing debt collection or have filed for bankruptcy. In Illinois, these exemptions include:

  • A homestead exemption for as much as $15,000 of equity in the home, or $30,000 if owned by a married couple
  • Wage protection if the debtor’s weekly income after taxes is less than 45 times the Illinois minimum wage
  • Protection for public assistance, retirement benefits, injury awards, and unemployment insurance
  • An exemption for one motor vehicle whose interest is not greater than $2,400
  • A $4,000 wild card exemption that can be used on its own or combined with other exemptions

A person is deemed to be judgment proof when they have no income or assets available after these exemptions.

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Four Keys to a Strong Guarantee in a Loan ContractA loan contract can have more than one party who is liable for the debt. For instance, a loan may have a guarantee, in which a third party called a guarantor promises to repay the debt in the event that the principal debtor defaults. A guarantor can be an individual, bank, or other financial institution and can agree to put up assets as collateral for the debt. For creditors, a guaranteed debt provides security if lending to someone who has a poor or unproven credit history. However, the guarantor could try to get out of their liability by finding a weakness in the contract. Here are four tips for creating a strong guarantee in your debt contract:

  1. Get the Guarantee in Writing: It may seem obvious, but it is crucial that the guarantee is a written agreement. Courts typically do not recognize oral agreements for guarantees, and even if they did, an oral agreement is an unreliable way to set strict terms for the guarantee.
  2. Use Clear Terms and Conditions in the Contract: The guarantee in the contract should state when the guarantor becomes responsible for the debt and how much they must pay. For instance, you could have an unconditional guarantee that requires the guarantor to pay regardless of the reason for the default or a guarantee that is conditional on actions such as attempting to collect from the principal debtor before collecting from the guarantor. 
  3. Include Terms Giving Consent to Modify the Agreement: One argument the guarantors have used against creditors is that the guarantor was unaware of a modification to the loan agreement that significantly increased their burden if they became liable for the debt. You can protect yourself against this argument by including a section in the contract in which the guarantor consents to pay the debt regardless of modifications.
  4. Check on the Guarantor: Having a guarantor for a debt does you little good if that person has a poor credit history. Do a background check on the guarantor just as you would with the principal debtor. Make sure they have the income or assets to pay if needed and a history of making payments on time.

Contact a Chicago Creditor’s Rights Attorney

When a debtor or guarantor balks at repaying a defaulted debt, you will rely on the strength of your contract and your legal team to protect your financial interests. An Illinois creditor’s rights lawyer at Walinski & Associates, P.C., knows the tactics that debtors use to avoid payment and how to respond. To schedule a consultation, call 312-704-0771.

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Illinois Creditors Bar Association Chicago Bar Association Illinois State Bar Association
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