Insights

Illinois Supreme Court Adopts New Requirements for Credit Card and Debt Buyer Collection Cases

July 2, 2018      |      Paul M. Orenic, Esq.   

On June 8, 2018, the Illinois Supreme Court adopted new Supreme Court Rules 280 through 280.5, which will govern the collection of credit card debts by original creditors and defaulted or charged-off consumer debts purchased by debt buyers.1 The new rules go into effect on October 1, 2018, and can be found on the Illinois Supreme Court website.

The new Supreme Court rules impose new pleading requirements and new requirements for default judgments, make changes to trial practice, and create new procedures for dealing with ID theft claims made by the consumer with respect to debt. The changes were made in an effort to provide more information to consumers regarding consumer debt, to ensure that cases are expeditiously resolved, and to encourage timely investigation of ID theft claims by creditors. The new rules will require credit card companies and debt buyers to make changes to the supporting affidavits filed with complaints, their procedures for providing witnesses in trials, and for responding to claims of ID theft.

Applicability

Pursuant to new Supreme Court Rule 280, the new rules apply to two types of debt: (1) credit card debt held by the originating credit card company, and (2) charged-off or delinquent consumer debt purchased by a debt buyer.2 “Consumer debt,” as defined by Rule 280.1(g), includes defaulted or charged-off credit card debt, payday loans, retail installment contracts, second mortgage debt, unsecured notes, and any other type of debt incurred by the consumer primarily for personal, family or household purposes, and which debt was purchased by a debt buyer.3 Any consumer debt that was charged off or became delinquent and was sold or assigned to a debt buyer is subject to the provisions of the new Supreme Court Rules 280 to 280.5.

Under Supreme Court Rule 280 and the definitions contained in Supreme Court Rule 280.1, it would appear that certain types of consumer debt are not subject to the new requirements. Original debt owed to an original lender would not be subject to the new requirements as long as it was not credit card debt. For example, a retail installment contract purchased by a lender from a dealer contemporaneous with the debtor's purchase of a vehicle would not be subject to the new Supreme Court Rules 280 to 280.5, as the lender would not be considered a debt buyer. However, if the lender sold the charged-off debt after a default by the consumer, the debt buyer purchasing the debt and suing the consumer to collect on the defaulted retail installment contract would be subject to the provisions of the new rules.

The new rules apply regardless of the amount of the debt or whether the case is a small claims, mandatory arbitration, or a law case.

New Pleading Requirements

Effective October 1, 2018, Supreme Court Rule 280.2 requires that every complaint filed by a credit card company or debt buyer shall: (1) include a statement that the suit is filed within the relevant statute of limitations; and (2) attach the new form of credit card or debt buyer affidavit.4 The Illinois Supreme Court provides a form of affidavit that may be used. Alternatively, existing affidavits can be modified provided that they contain the required information, which includes:

  • Identification of the consumer or account, including as of the charge-off date information, the creditor's full name, the name of the consumer, the last 4 digits of the account, the date the account was opened, and the nature of the debt (e.g., credit card debt, payday loan, installment loan, etc.);
  • A copy of the written contract;
  • If the debt is based upon an unwritten contract, a copy of a document provided to the consumer while the account was active that demonstrates that the consumer incurred the consumer debt. For revolving credit accounts, a statement reflecting the charge-off balance shall be deemed sufficient.
  • The most recent activity on the account prior to or after charge-off, including charge-off balance, charge-off date, date of last payment and total amount paid since charge-off; and
  • For cases brought by a debt buyer, the complete proof of ownership or chain of title, including the date of each assignment. While the new Supreme Court Rule 280.2 does not specify if copies of the assignments must be attached, the courts require as a condition of prove up that the assignments be provided. Therefore, copies of the assignments should be attached to the new form of affidavit at the time the complaint is filed.

The new affidavit required by Supreme Court Rule 280.2 and the affirmative statement that the suit is filed within the relevant statute of limitations is not required for complaints filed by original creditors seeking to recover non-credit card debt.

New Requirements for Default Judgments

New Supreme Court Rule 280.4 states that after October 1, 2018, if a complaint filed by a credit card company or debt buyer is not in compliance with the new rules, the court may not enter a default judgment.5 The new rules are not prospective only, meaning that they will apply to all cases filed after October 1, 2018 as well as all pre-judgment cases pending on October 1, 2018.

A complaint filed prior to October 1, 2018, but up for default judgment after October 1, 2018, will need to comply with the new affidavit requirements before a default judgment will be entered. A complaint filed after October 1, 2018 will need the new form of affidavit attached before a default judgment will be entered. After October 1, 2018, any complaint not in compliance with the new rules may be dismissed by the court on motion of the defendant or on the court's own motion.

Continuance of Trials or Voluntary Dismissal on Day of Trial

New Supreme Court Rule 280.3 makes a significant change to the manner in which trials are continued or voluntarily dismissed on the day of trial. Currently, most courts permit a creditor to make an oral or written motion on the day of trial to voluntarily dismiss a case without prejudice if a witness is not available. Under new Supreme Court Rule 280.3, oral or written motions to voluntarily dismiss a credit card or debt buyer case raised for the first time on the day of trial without prior notice to the consumer are no longer permitted.6 New Supreme Court Rule 280.3 does not apply to cases brought by original creditors seeking to recover non-credit card debt.

Currently, if a plaintiff files a properly noticed written motion to voluntary dismiss pursuant to Section 2-1009 of the Illinois Code of Civil Procedure before or on the day of trial, the trial court shall dismiss the action even over the objection of the consumer.7 There is no change to the ability of a creditor to voluntarily dismiss a case before or on the day of trial, provided that timely notice of the motion to dismiss is provided to the consumer. If a creditor files a properly noticed written motion to continue a trial on the day of trial, it is within the court's discretion whether or not to continue the trial.

New Supreme Court Rule 280.3 mandates that absent a properly noticed written motion for a continuance or voluntary dismissal, a motion, whether oral or written, made on the day of trial to dismiss or continue the trial shall be denied and the case shall proceed to trial. This new rule will permit a continuance provided that the trial court finds that (1) each party has consented to a continuance after having been advised of the potential consequences of not consenting and (2) the continuance serves the interests of justice.8 Under new Supreme Court Rule 280.3, if the court denies a motion to voluntarily dismiss on the trial date for failure to comply with new Supreme Court Rule 280.3 (because the motion to dismiss was not written or timely noticed), or the consumer will not agree to the continuance, then the trial must proceed.9

The usual time needed to properly notice a written motion to voluntarily dismiss is five business days. Given this time frame, creditors and their attorneys will need to make decisions regarding whether or not a witness will be provided several weeks prior to the trial date. The apparent purpose of new Supreme Court Rule 280.3 is to compel creditors to determine at a much earlier time if the case is really going to trial and if the creditor is not proceeding to trial, to then so inform the consumer. The new Supreme Court rules attempt to avoid situations in which the consumer appears at trial only to learn that the creditor does not have a witness and will not be proceeding.

Trial courts generally do not continue trials, especially on the trial date, unless good cause is shown. If no witness will be made available for a trial by the creditor, the only safe alternative for the creditor is to timely move to voluntarily dismiss rather than seek a continuance. The determination as to witness availability must be made by the creditor with sufficient time to permit the motion to voluntarily dismiss to be timely filed and served on the consumer. A motion to continue a trial, even if timely made, is still within the discretion of the trial court to grant. If the court denies a timely motion to continue presented at the time of trial, then the trial must proceed. The creditor cannot, as under the old practice, orally move on the day of trial, after a motion to continue has been denied by the court, to then seek the voluntarily dismissal of the case. Under the requirements of new Supreme Court Rule 280.3, the trial court must deny that oral motion and the trial must proceed.

ID Theft Affidavits

New Supreme Court Rule 280.5 provides that if a consumer asserts that he or she is a victim of ID theft with respect to the consumer debt sought to be collected, the consumer shall serve on the creditor an identity theft affidavit in the form approved by the Illinois Attorney General or in the form approved by the Illinois Supreme Court (use of either form is permitted).10 Within 90 days of serving the ID theft affidavit on the creditor, the creditor or the court, on its own motion, shall dismiss the case unless the creditor files an affidavit asserting facts that indicate that the consumer is not the victim of ID theft and is responsible for the consumer debt at issue.

New Supreme Court Rule 280.5 does not contain a provision allowing a creditor to seek an extension of the 90-day time limit. Under current Supreme Court rules, it may be possible for a creditor to seek an extension of time for good cause shown.

If, after conducting an investigation, the creditor believes that the consumer is not a victim of ID theft and is liable for the debt, then the creditor must supply an affidavit setting forth the factual basis for that conclusion. This requirement will necessitate substantially greater effort on the part of the creditor to both investigate and respond to ID theft claims, and document the reason for any denial of an ID theft claim.

Further, until the creditor files an affidavit in response to a consumer's ID theft claim, the case will in all likelihood be put on hold by the court.

Conclusion

New Supreme Court Rules 280 through 280.5 result in substantial changes to the manner in which credit card companies and debt buyers may file suits against consumers, may obtain default judgments, may seek the voluntarily dismissal of an action on the day of trial, and respond to ID theft claims. The rules are new and complex, and failing to comply with them can have serious consequences. The lawyers at Weltman can assist you in ensuring compliance with these new requirements.

For more information, please contact Paul M. Orenic, Esq. Mr. Orenic practices in Consumer Collections, and is based in the firm's Chicago office. Mr. Orenic is licensed in Illinois and is admitted to practice before the U.S. District Court for the Northern District of Illinois, and the U.S. Bankruptcy Court for the Northern, Central and Southern Districts of Illinois. He can be reached at 312.253.9631 and porenic@weltman.com.


1Illinois Supreme Court Rules 280-280.5.
2Illinois Supreme Court Rule 280.
3Illinois Supreme Court Rule 280.1(g).
4Illinois Supreme Court Rule 280.2.
5Illinois Supreme Court Rule 280.4.
6Illinois Supreme Court Rule 280.3.
7735 ILCS 5/2-1009.
8Illinois Supreme Court Rule 280.3.
9Illinois Supreme Court Rule 280.3.
10Illinois Supreme Court Rule 280.5.