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How to Collect from a Deceased Debtor’s EstateIt is common for a person to die before they are able to pay off all of their debts. As a creditor, you have the right to seek repayment for debts even after a debtor has died. If someone cosigned on the debt, your collection efforts can shift towards the living party. Otherwise, you will be collecting the debt from the deceased party’s estate. Each state has its own rules for how soon creditors must make claims against the estate and how much of the estate is available to creditors. For creditors operating under Illinois law, here are the answers to three basic questions about retrieving debt from a deceased party:

  1. What Priority Do Creditors Have?: A deceased person’s estate must repay the person’s creditors before it distributes assets to beneficiaries. Illinois exempts certain assets from being collected, such as life insurance and retirement benefits. In the event that the deceased person’s debts are greater than their assets, their assets will be distributed based on the priority of each creditor’s claim.
  2. What Are the Deadlines for Collection?: The deadline for creditors to file a claim against a deceased person’s estate depends on whether the estate is going through the probate process. During probate, the executor of the estate must attempt to contact the deceased party’s creditors by delivering notifications to their addresses and posting an announcement in a local publication. If you are notified directly, you have three months to file a claim against the estate. If you discover the notification in a publication, you have six months to file a claim. Without probate, the executor of the estate is not legally required to contact you, but you can file a claim up to two years after the person’s death.
  3. Who Should You Contact About Collecting the Debt?: In most situations, you need to contact the person who has been designated as the executor of the estate in order to file a claim. The surviving family members of the deceased party do not inherit the debt and are not directly liable for repaying you. The exceptions are if one of the family members cosigned on the debt or if family members received assets from the estate without allowing creditors to file a claim.

Contact an Illinois Debt Collection Attorney

Collecting debt after a person has died is a sensitive issue. You need to be proactive in filing a claim while respecting those who are in mourning. A Chicago debt collection attorney at Walinski & Associates, P.C., can navigate the probate process to help you claim the money that is owed to you. To schedule a consultation, call 312-704-0771.

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What Are the Statutes of Limitations for Debts in Illinois? There is no statute of limitations on how long a creditor can attempt to collect an unpaid, but there is a deadline for when they can still use litigation to receive a court judgment against the debtor. Litigation has advantages over other debt collection practices because: The debtor is legally obligated to repay what they owe. Creditors can request methods of enforcing the court order, such as wage garnishment. The mere threat of litigation may be motivation for the debtor to cooperate. If you allow the statute of limitations to expire on a debt, you are left with fewer options for collecting that debt. You must understand how the statute of limitations works to know whether it is too late to file a lawsuit over an outstanding debt. What Is the Statute of Limitations? The number of years you have before the statute of limitations expires is different depending on the state and type of debt. In Illinois, the statute of limitations is: Five years for unwritten debt agreements and open-ended agreements Ten years for written agreements and promissory notes An unwritten agreement could be an oral agreement between two parties on a debt. Credit card accounts are the most common form of open-ended agreement, which allows debtors to continually borrow and repay their debts. Many debts are entered through written agreements, which must state the terms and conditions of the loan. A promissory note, such as a mortgage or student loan, requires the borrower to repay the debt within a specified time frame and often with interest. Illinois’ statute of limitations for written agreements is longer than most other states, while its statute of limitations for unwritten and open-ended agreements is about average. When Does the Statute of Limitations Start? It is important to know that the countdown for the statute of limitations starts when the borrower first defaults on their debt and not when the agreement was first created. You may have entered a written debt agreement 10 years ago, but the statute of limitations to file a lawsuit will not have expired if the borrower stopped making debt payments less than 10 years ago. Keeping an accurate record of debt payments will prove that you have not passed the deadline. Contact a Chicago Creditor’s Rights Lawyer When a borrower defaults on their debt payments, you must decide how you will pursue collection of the debt. If you wish to use litigation, it behooves you to act sooner rather than later. A Chicago creditor’s rights attorney at Walinski & Associates, P.C., can explain how the litigation process works. Schedule a consultation by calling 312-704-0771 today.There is no statute of limitations on how long a creditor can attempt to collect an unpaid debt, but there is a deadline for when they can still use litigation to receive a court judgment against the debtor. Litigation has advantages over other debt collection practices because:

  • The debtor is legally obligated to repay what they owe.
  • Creditors can request methods of enforcing the court order, such as wage garnishment.
  • The mere threat of litigation may be motivation for the debtor to cooperate.

If you allow the statute of limitations to expire on a debt, you are left with fewer options for collecting that debt. You must understand how the statute of limitations works to know whether it is too late to file a lawsuit over an outstanding debt.

What Is the Statute of Limitations?

The number of years you have before the statute of limitations expires is different depending on the state and type of debt. In Illinois, the statute of limitations is:

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Illinois Law Protects Commercial Loan LendersWhen creating a loan agreement in Illinois, there is a big difference between personal loans and commercial loans. Individuals or spouses take out personal loans in order to pay for family or household expenses – the most common example being home mortgages. Commercial loans are credit agreements made with business owners for the purpose of starting or expanding a business. In Illinois, commercial loans are more favorable to lenders than personal loans because of the Illinois Credit Agreements Act. Thus, making sure to classify a loan as a credit agreement could save you from a lengthy legal battle.

Commercial Loan Rules

The Illinois Credit Agreements Act states that a credit agreement or any revisions to an agreement is valid only if the agreement is in writing and signed by both parties. The law defines credit agreements as not including credit cards or loans for personal, household, or family purposes. The lender and the commercial debtor cannot create an agreement by:

  • Discussing changes to an existing agreement;
  • Reaching an oral agreement; or
  • Sending a letter or email with the terms of the oral agreement.

Debtors try to use oral agreements to defend themselves against lenders who are attempting to collect on a loan or to file a claim against a lender that they accuse of violating their agreement. With credit agreements in Illinois, commercial debtors have no claim or defense based on oral agreements.

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Illinois Reducing Interest Rate, Revival Deadline on Consumer Debt JudgmentsIllinois Gov. J.B. Pritzker is expected to sign a bill that will change the rules for collecting consumer debt after a debt judgment. The bill, which has passed both the Illinois Senate and House of Representatives, would reduce the interest rate charged to outstanding consumer debts. More significantly, the bill would cut by 10 years the amount of time that a creditor has to revive a judgment that has become dormant. Sponsors of the law tout it as a way to protect low-income Illinois consumers from cumbersome debts. Creditors of Illinois debtors may need to work faster to collect on court-ordered debt judgments.

Qualifications

There are two important caveats of the law as it applies to debtors. The changes affect debt judgments only if:

  • They involve consumer debts; and
  • The debt is $25,000 or less.

Consumer debts are debts accrued by individuals for personal, family, and household expenses. Nonconsumer debts are debts from an organization or business or debts that an individual accrues for purposes other than their personal expenses.

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Illinois Considers Raising Homestead Exemption to $150KIllinois lawmakers have once again introduced legislation that would change creditor’s debt collection practices. A similar bill from last year failed to make it out of committee, but lawmakers have outlined several goals that they believe will protect debtors:

  • Requiring all court summons for a debt collection lawsuit to include a debtor’s “bill of rights”;
  • Reducing the time in which a creditor can revive a judgment against a debtor to five years;
  • Lowering the annual interest rate on debt judgments less than $25,000 to two percent; and
  • Raising the value of the exemptions that debtors can use to protect their assets from creditors.

The proposed change to the homestead exemption stands out because of the sizeable jump. The exemption would increase from $15,000 to $150,000 for an individual homeowner and $30,000 to $200,000 for a couple.

Homestead Exemption

A home is often the most valuable property that a person owns, which makes it important to debtors and creditors. Creditors could recover a large portion of the debt by forcing the debtor to sell the property, but the debtor wants to protect the equity he or she has in the property. Illinois’ homestead exemption allows a debtor to prevent creditors from selling a property as long as the debtor’s equity interest is below $15,000. The equity interest is calculated by subtracting what the debtor owes on the mortgage from the value of the property. Raising the homestead exemption would make it more difficult for creditors to sell a debtor’s home after a judgment lien.

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Illinois Enacting New Rules for Credit Card Companies, Debt BuyersThe Illinois Supreme Court has adopted new rules regarding procedures for credit card companies and debt buyers who file lawsuits against debtors. The rules will go into effect on Oct. 1 and will apply to both new cases and active cases that have not reached a judgment. The new rules do not apply to an original creditor that is not a credit card company. The rules create new requirements that are meant to force creditors to be more timely and thorough in filing specified motions in court. There are three notable rule changes:

  1. New Affidavit Requirements: A credit card company or debt buyer must use a new affidavit form when filing a complaint against a debtor. A statement must accompany the affidavit that says that the complaint was filed within the statute of limitations. Applicable creditors can modify their existing affidavit to comply with the new rule, as long as it includes the debt contract, relevant information on both parties, and a history of the debt.
  2. Same-Day Motions: Credit card companies and debt buyers will need to give prior notice before requesting a continuance or voluntary dismissal of a trial. This means that the court will no longer accept a plaintiff’s written or oral request to end or continue a trial if it is made on the day of the trial. Courts may require that applicable creditors file a motion to dismiss a trial at least five business days before the trial. As for a continuance, the court may accept a same-day request if both parties agree to it and the continuance would serve the interest of justice.
  3. Identity Theft Rules: A defendant may claim that he or she is not liable for a debt because he or she was the victim of identity theft. A new rule requires a debtor to file an identity theft affidavit. Once the affidavit is filed, the creditor will have 90 days to either dismiss the lawsuit or contest the affidavit. To contest the identity theft claim, the creditor must submit its own affidavit that gives factual evidence as to why the identity theft claim is false.

Effect on Creditors

The new rules largely favor debtors because they require creditors to make quicker decisions on how to proceed during their cases. Failing to comply with the rules could delay a judgment or lead to a dismissal. A Chicago creditor’s rights attorney at Walinski & Associates, P.C., can help you remain in compliance with court rules and obtain the judgment you need in your case. Schedule a consultation by calling 312-704-0771.

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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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